Being a leader in business is challenging enough already, let alone trying to navigate through a crisis. Having to make tough decisions gets even harder when the economy drops into a recession and anxiety sets in. Let’s review the biggest mistakes we’ve seen and what to do instead…
Mistake #1 – Ignore Your Financials.
Cash Flow problems are one of the main reasons a business will struggle to survive a recession. As profit margins shrink, expenses increase, and customer sales become harder to close, it is imperative to make smart business decisions based on factual financial information. Make sure you are tracking and managing your KPI’s closely – P&L, Cash Report, Budget to Expenses, Job costing, etc. Look at this information closely each month so that you can adjust quickly before things get out of control.
Mistake #2 – Panic!
The worst thing that you can do when you are leading through difficult times is to lead from emotion – and especially a place of panic! Panic clouds your logic and judgement and creates fear and anxiety for you and your team. In contrast, take a deep breath and take control! Gather information for review and then make a sound decision based on facts, not emotion. If it is helpful, sit down with another leader, mentor, or coach and discuss your fears – but don’t do it with your team! You need to project a sense of calm and control – don’t let them see you sweat!
Mistake #3 – Cut Back on Your Marketing Efforts.
At first glance of your budget, it might seem like cutting your marketing dollars is one of the easiest line items to address; however, you may be doing more harm than good. A recent article in Harvard Business Review found companies that did not slash their marketing budgets during a recession strongly bounced back. Staying front and center with your customers will keep you top of mind and control the message you are sending during tough times. Instead of cutting, consider increasing your tracking and monitor your ROI closely to make sure your marketing dollars are working for you.
Mistake #4 – Stop Communicating.
Communication is key – and is even more important during a recession. This is a time to be honest and transparent with your key stakeholders. Reach out to your bank, landlord, vendors, and suppliers and have an open line of communication during these tough times. Being proactive and having a dialogue before things get difficult creates a sense of partnership and promotes your good management skills. Be clear on what you need to help you manage through these difficult times. In some cases, you might even be able to renegotiate terms to help you manage cash flow.
Mistake #5 – Ignore Your Employees and Culture.
Recessions are not only difficult on leaders, but they are also stressful on employees. It’s important to pay attention to your biggest assets – your employees. Don’t forget to have an open line of communication with your team and allow them to share their concerns and talk through their own fears. By coming together to battle through these tough times, you’ll build on your culture and create a positive company morale.
For assistance on how you can prepare yourself and your business for the Exit Strategy, consider working with Greenlight Leadership Development Group. We come alongside leaders to help them scale their business for exit! For more information, visit our website www.greenlightleaders.com or reach out to Jeanette@greenlightleaders.com