Thriving in Tough Times: 4 Strategies to Recession-Proof Your Business

4 main strategies utilised by companies during the recession period:

• Prevention-focused companies: A prevention-focused company is one that focuses on risk management and avoiding negative outcomes to maintain the status quo. During a recession, they tend to focus on minimising risks and avoiding or cutting losses to stay afloat. This may involve cost-cutting measures such as reducing staff, freezing salaries, and delaying capital expenditures. While these measures are necessary, prevention-focused companies may miss out on growth opportunities due to their conservative approach in decision making as their main priority is to protect the existing assets and investments.

• Promotion-focused companies: A promotion-focused company is the opposite of a prevention-focused company- their core mission is to gain an advantage in the market share and gaining a competitive advantage against their more established competitors. They are more innovative and agile, and are likely to pursue new opportunities in order to expand their operations and increase profits. They are more aggressive in their decisions as long as it pushes them further towards their goal of gaining a major market share.

• Pragmatic companies: A pragmatic company is focused on practicality and efficiency- they ensure their work processes help push them to become more efficient and effective. With this focus in mind, they tend to optimise and maximise their returns on investments by increasing the efficiency and efficacy of their processes. Their decision making is pushed by their desire to improve their current processes and optimising their resources.

• Progressive companies: A progressive company is more innovative, agile and future-oriented. They cut costs by increasing operational efficiency and place great investments back into other aspects in the business such as R&D, Marketing, Equipment etc to help explore other business opportunities. By deploying a mix of the 3 strategies- cutting costs, improving efficiency and maximising resources they are able to explore other business possibilities. They disrupt the status quo and push the traditional business models to create new markets and make their own opportunities for growth. 

So out of all the strategies- which one is the best one to deploy? 

Well, past research has found that businesses that are able to effectively reduce expenses and invest back into the business tend to emerge from the recession stronger than before. Especially businesses who used the progressive strategy tend to come out more victorious than that of their adversaries. Their combination of selective defence moves and comprehensive offensive moves holds great promise at ensuring they will thrive during and especially after the recession.

So what does that mean for your business?

To put it simply, a business that focuses on optimising and increasing their operational efficiency will survive and thrive. By focusing resources to optimise every process within the business they are able to operate at a lower cost without compromising on their quality of service or product. In turn, the lower operational efficiency costs helps rake in bigger profits when demand returns.

It is important to note that while the strategies enlisted provide a roadmap for businesses to follow during tough times, they are not a guarantee of success. What is most imperative is for a business to not wait until a downturn in the economy comes around before taking action- preparing early always helps to recession proof your business and help it thrive.

In summary, prepare, strategize, and take action. Remember, tough times may come, but with the right mindset and approach, tough businesses can and will survive.