It’s a really interesting question when you think about it.
Yesterday, after we announced the launch of our latest release of Publicaster, then followed it up with an incredible company meeting, I was inspired to write this post. Our COO Doug Broujos put a slide in our company deck highlighting some of the ways that companies react to a recession, and I think the message hit home to the team. I wanted to explore those behaviors a little further in a post.
With all of the doom and gloom in the news these days, and our country going through one of the worst recessions in history, there seems to be 3 common ways that companies are dealing with it. Depending on what kind of company you are or want to be, or what kind of company you work for, will dictate how your organization reacts to a recession. More importantly, the actions your company takes now, can potentially have a dramatic impact on it’s future success.
Lets take a look at 3 of the common reactions companies execute on during a recession:
1. Give Up
Believe it or not, some companies operate so close to being on the edge of going out of business, that once the true effects of a recession are felt, they fold quickly. In some cases, investors are simply cutting their losses, and in other situations, companies with very small market share in their industry find themselves not being able keep up with their market, due to a lack of funds and resources. They quickly begin to be outpaced by their competitors, and in the end, they either shut down or sell off to a competitor / partner.
2. Sit and Wait
Another common reaction is a company going into “lets just sit this out” mode. What does that mean operationally? Essentially it means, play it safe. These organizations make a few market driven decisions, like lay offs and adjust their budgets appropriately, and the very last thing they do is take any risks. Companies that are stable and operate in this mode often can retreat to a “safe harbor status,” and will then begin to get aggressive in their markets once the economy turns.
3. Run Hard
Based on my opinion and my experience, the companies that look at a recession and see opportunity, know that now is the right time to be as aggressive than ever in your market. These organizations don’t buy into the psychological factor of the recession, they also don’t negate reality, but they seek opportunity and take advantage of the market position by the companies who fall under the two categories above.
Running hard in a recession to me is the best thing you can do for your company, and here are 5 key reasons why:
- Depending on your industry, its most likely that many of your competitors are playing it safe and not being as aggressive as they could be with sales and marketing. This creates an incredible opportunity to grab market share.
- Recessions present the opportunity to reduce your operating expenses greatly based on the pure fact that almost everything is on sale at a discount.
- Solid talent is on the market and looking for opportunity due to lay-offs. Your team is everything.
- Marketing your tail off in a recession can create more opportunity for your company than you can imagine.
- Running hard now, sets you up for the future (most important point).
The key point here is that for those of us that can see through the fog and take the long view, we know well there is a brighter day coming for the economy as a whole. Getting aggressive now while the recession is in full effect, and moving your company forward with sales, marketing and product development will position your organization for solid growth when the market does turn around.
These are definitely tough times for many, there’s no doubt about it. The key is to keep remembering that this is a cycle. So, if you are a business owner or in executive management at your company, you should be asking yourself the question: What kind of company are we going to be during this recession?
Are you giving up, playing it safe, or going for it?
I would love to hear your thoughts and comments.