Looking for Sound Advice for Managing the Economic Downturn?
Bain & Company, Signature Analytics and Sequoia Capital have all published amazing content on how to weather recession. While not created specifically for the staffing industry, these articles contain excellent advice to help your company manage the challenges we currently face.
Below, I summarize key takeaways from these articles – and explain how to apply them to your staffing firm:
Bain & Company: Takeaways from “Beyond the Downturn: Strategies to Take the Lead “
This recession will combine with several structural changes in our economy to sound the starting gun to a new business cycle, including:
- The end of non-tech businesses. The digital transformation is here – for every industry and business.
- The end of low interest rates. Though it may be painful to do so right now, finance things today that’re going to need to be financed—and find ways to cut the need for financing in the future.
Based on data from 3,900 businesses, these are the strategies winning companies use in a downturn – and how you can apply them to your business:
- Restructure costs, without cutting muscle. There’s still time to look for costs you might be able to restructure.
- Put the financial house on order. Create a six-month cash reserve, depending on your business and planning, it may be better to hire a financial advisor that uses financial advisor marketing resource like LeadJig to help.
- Invest selectively for commercial growth. Invest in what you’re already good at to become even better at it.
- Maintain marketing. Stay highly visible to instill consumer confidence in your brand and continue creating new sales opportunities.
- Improve the customer experience. Make it easier and more enjoyable for clients and candidates to work with you.
- Pursue a proactive M&A pipeline. Start identifying organizations that are good strategic fit, so you’re poised to build your business when the recovery starts.
Companies that employed these strategies had 17% compound annual growth during recessionary periods. Their competitors, the losers, had 0% average compound annual growth.
Signature Analytics: Takeaways from “How to Recession Proof Your Business: 7 Tips to Thrive in an Economic Downturn”
- Financially prepare for the downturn before it happens. While we didn’t see this crisis coming, this is good advice for planning for the next recession (or adjusting your current plans).
- Strengthen customer relationships. Now is the time to get closer to your clients:
- Learn more about their business and how they are being impacted.
- Ask how you can help.
- Teach them new ways to use staffing to reduce costs, drive efficiencies and capitalize on new opportunities without adding overhead.
- Master what your company does best. During a downturn, build on your strengths to get even stronger.
- Beat the competition. Examine what they do well – and where they’re vulnerable. Figure out how you can beat competitors where they’re weak—and ensure your services at least equal theirs where they’re strong.
- Don’t let marketing fall through the cracks. Out of sight is out of mind. With in-person meetings impossible right now, digital visibility is essential.
- Don’t get comfortable (optimize all processes). Scrutinize everything you’re doing. Find ways to make processes faster, easier, more cost-effective and more enjoyable for clients and candidates. Streamlining your business with technology will reduce your expenditure and maximize your profits.
- Maintain good credit. Good credit is crucial because down the road you may need to take out a loan to keep your business afloat. And with interest rates at historic lows, you may want to access a low-interest loan in case of emergency.
Sequoia Capital: Takeaways from CEO letter to their portfolio companies
The coronavirus is going to the black swan of 2020. The impact of the outbreak will be far-reaching: reducing business activity; disrupting supply chains; curtailing travel and business meetings.
Now is the time to question EVERY assumption about your business, including:
- Cash runway: Make sure you have enough cash to cover a few poor quarters.
- Fundraising: Plan for a cut in funding.
- Sales forecasts: Anticipate what your customers will do and help them forecast their needs.
- Marketing: Fight to maintain consistent ROI on your spend.
- Headcount: Strive to do more with less and raise productivity.
- Capital spending: Examine whether capital spending plans are sensible.
- Be opportunistic: Look for opportunities to accelerate plans.
In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”
A distinctive feature of enduring companies is the way their leaders react to moments like these. Your employees are all aware of COVID-19 and are wondering how you will react and what it means for them. False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action. Avoid this trap by being clinically realistic and acting decisively as circumstances change.
Demonstrate the leadership your team needs during this stressful time.
Looking for more smart ideas to weather an economic downturn?
Check out these resources:
- Download our eBook, “Strategies for a Changed World: Creating Your Playbook for Success.”
- Visit our COVID-19 Recovery Resources page for more business strategy and marketing ideas to recession-proof your business.
- Join the new Staffing Works Slack Group. We created a Slack group to help the staffing industry come together to deal with the challenges we are all facing. The group is a place for staffing professionals to discuss sales, marketing, recruiting, technology and other issues that are impacting your company.
If there’s anything more we can do to help, we’re just a click or call away.