How have companies like Samsung, Costco, and Honeywell weathered previous downturns and used them to propel growth? Based on Harvard, McKinsey, Deloitte, and Bain & Company studies, we've compiled the proven techniques used by leading firms to efficiently navigate through a slump and prosper after it into one critical report. Here are the most important points. You may download the whole report at the bottom of the page!
Let's look at how to make it through the recession and prosper thereafter.
1. Remain calm, balanced, and focused on the future.
When the recession is over, how do you want your company to look? How about three years from now? If the economy worsens, the answers to these questions should help you develop a resilience strategy and make all of your decisions easier.
Taking a 'future-back' approach, according to Bain & Company, helps your management team to plan for outperforming your competitors during and after the crisis.
2. EVALUATE YOUR CURRENT STATUS
To profit from an economic slump, you must first assess your company's financial and strategic condition objectively. If your company has a strong financial position but a weak market position, for example, you can focus on a defensible core offering, invest to expand this space, and cut costs to fund this future business path.
3. HANDLE CASH LIKE A KING
During a recession, lower sales and less cash are unavoidable. The first, and maybe most important, step you can take to ensure you emerge from challenging times in good shape is to boost your company's financial health ahead of time.
You do, however, have some control over a few aspects.
4. PREFER PRUDENT PRUNING TO AGGRESSIVE COST-CUTTING.
According to a Bain & Company study of roughly 3900 organisations during and after the global financial crisis, 'losing' companies acted under the assumption that massive cost-cutting would be enough to weather the storm. They hurt themselves by attempting to slice and burn their way to the other side,' reducing R&D, ruling out acquisitions, slashing marketing and sales, and laying off key staff in a desperate bid to save money.
Consider how you may cut fixed expenses and effectively manage working capital to boost cash flow and develop demand volatility resilience.
5. GET YOUR FINANCES IN ORDER
One of the most important operations in anticipation of an economic catastrophe, according to a Delloite poll of over 1,000 CFOs, was to balance their finances. A McKinsey research study on the performance of several organisations during the GFC came up with a consensus conclusion that a common thread among winners was an organisational focus on balance sheet management. You can take a variety of practical steps right now to lower your debt, consolidate your debt, and improve your overall financial situation.
6. GO ABOVE AND BEYOND LAYOFFS
Layoffs and redundancies have unfortunately become closely tied to economic downturns. This isn't the only option. Layoffs are detrimental to both individuals and businesses. For various reasons, this is correct. To begin with, redundancy and pay-out costs drain cash reserves instantly. Second, as the economy recovers, firms should avoid the high cost of hiring and training new employees. Third, the societal costs of such a transition may be even greater in the long run.
Companies that relied less on layoffs and more on cutting operating costs to reduce overheads fared better during the Great Recession, according to a Harvard Business Review study. According to HBR, companies should also consider hour reductions, furloughs, or performance compensation.
7. FINE-TUNE AND STREAMLINE
Costco's strategic approach to simplifying operations and processes was explored by Bain & Company during the global financial crisis. Smart streamlining strategies like these will help you not only stay afloat during and after the recession, but also boost your revenues and earnings, just like Costco did.
8. PAY ATTENTION TO RETENTION OF CUSTOMERS
Client retention can raise profitability by 25–95 percent with just a 5% increase.
During a recession, some business executives grow concerned and want to expand their businesses in order to obtain new clients. Concentrating your efforts on strengthening existing client connections while remaining focused on your core audience, on the other hand, is a more profitable plan that will not risk your company's future.
Tags:
how to survive a recession, how to survive an economic collapse, how to survive a recession and thrive afterward
Read This Full ARTICLE, Click Here
Comments
Post a Comment