What Kind of Company Are You Going to Be in a Recession?

by Greg Cangialosi on February 26, 2009

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:

  1. 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.
  2. Recessions present the opportunity to reduce your operating expenses greatly based on the pure fact that almost everything is on sale at a discount.
  3. Solid talent is on the market and looking for opportunity due to lay-offs. Your team is everything.
  4. Marketing your tail off in a recession can create more opportunity for your company than you can imagine.
  5. 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.

{ 2 trackbacks }

links for 2009-02-28 « Shashi Bellamkonda - Social Media Swami
February 28, 2009 at 2:02 pm
East Des Moines Chamber » Recession reaction: leave, wait or RUN?
March 3, 2009 at 7:20 pm

{ 7 comments… read them below or add one }

Marc February 26, 2009 at 3:22 pm

I would add to your third point that running hard includes constantly looking for ways to improve your game, both individually and on a company level, which often means investing time in further education outside of the “9-5”. Even more now than ever it doesn’t cut it to just show up and hustle all day. Everyone has to commit to staying ahead of the curve, and getting fully engaged in the market. Without losing mindfulness of the market one almost needs to act as if there is no recession. The competition is fierce to say the least.


lawton chiles February 26, 2009 at 3:40 pm

The whole "sit and wait" idea is a really bad one. You should be proactive, not just waiting for the market to change.

Right on.


Kate McPhail February 26, 2009 at 3:54 pm

I agree will all points, but wanted to add that generally the company that "Runs hard" also has a better means of internal communication. When your team is clued in, they feel more inclined to give in tough times; whereas, the company that "sits and waits" will often have employees too scared to do anything but fly under the radar to avoid any unwanted notice.
I also 100% agree with Marc, that you have to stay ahead of the curve.
Great post, Greg!


gregcangialosi February 26, 2009 at 4:57 pm

Thanks everyone for commenting!

@marc there is no doubt about it! great point on education. Its more important than ever to keep your team in the loop on the latest trends and educate at every opportunity you have! And to your point of hustling, absolutely, its a given (and hopefully the people inside of most organizations understand this). Hustle, hustle, hustle!!!

@lawton you hit the nail on the head!

@kate Right on! the "sit and wait" companies generally don't flow information and data and communicating on a frequent enough basis, and even MORE importantly, they don't communicate with their customers enough! Talk to your people and talk to your customers.

Great stuff, thanks for adding your thoughts!


Lori T. Aulenbach February 26, 2009 at 3:45 pm

Compelling thoughts, Greg, considering most of us are forced to address the issue of marketing our products and services in a more budgetarily conscious fashion in these tough economic times AND charged with reaching outside the old collection of packaged offerings to think smarter, faster, more creatively in order to do ALMOST the same thing for MUCH less. Of course, that also means our internal, billable hours need to be fastidiously reigned in as well.

On another note, as we at Varsity Branding (http://www.varsitybranding.com) assist our 55+ market, we must also be aware of the greater significance the recession has taken on those owning 70% OF OUR DISPOSABLE INCOME in the US–our older adults. A lot of these folks are also our current CEOs and high level execs at the same firms we are connecting with in the global market, causing what we feel is the "double whammy" effect on revenues.

I find the challenge of matching services and budgets with ever-evolving client wants and needs has always been part of the overall business model, quarter after quarter, year after year and view the constantly changing landscape as a satisfying opportunity to showcase the art of client service. So BRING IT ON!


K.C. Hopson February 26, 2009 at 11:41 pm

Thanks for a good article Greg. Smart companies are running hard now because they know that their competition is going to get thinned out. Recessions have a way of altering the business landscape and if you're a survivor then, in many ways, you have the advantage of a first mover when it's all over. Companies that are not lean and mean will probably not survive this downturn.


gregcangialosi February 27, 2009 at 6:55 am

@Lori no doubt there is a challenge there, but like you say, BRING IT ON!

@KC thanks for your thoughts, your "first mover" message is right on.

Thanks for reading!


Leave a Comment