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The future economic forecast is looking unpredictable. You might be thinking, “What’s new?” The fact of the matter is that there is always uncertainty. 2008 caught millions of people off-guard in a matter of days. It isn’t about pulling back away from this uncertainty, though. It’s about heading towards it with armor on — your business’s economic armor — the kit you probably knew you needed but might not yet have.
Your business’s armor is essential to its success. Sure, you can go through a few years without it, but you’re just counting on sheer luck here to get through. And just like you cover yourself from head to toe before you go into battle, your business needs to be covered back to front as well. If you haven’t experienced a downturn in business from economic collapse, you might have not ever really considered this. So, what does a recession-proof CEO look like? Let’s build your armor together.
Related: How to Recession-Proof Your Business
1. Your helmet: The financial deep dive
Starting off, let’s get your head covered. Walking around without knowing your finances is like heading into battle without a helmet.
Your financial books aren’t just for your accountants. They’re your reality check. Block out those critical three to five hours as the year draws to a close. Scrutinize every nook and cranny of your expenses. Which subscriptions are merely sapping resources without yielding returns? If multinational giants are meticulously trimming their operational fat, there’s a cue for you.
How to put your helmet on: This isn’t about shrinking your team size; it’s about eliminating redundancy. Optimization is the key. Analyze your subscriptions, third-party services, and extra expenses. I can guarantee there is an area right now that you can tighten up.
2. Your sword: The sacred 10% profit mantra
Next, you want to build your sword — something you have with you that you can use when in battle to fight back with.
Make the 10% profit mantra a non-negotiable. Every dollar that comes in, immediately set aside 10% as profit. Establishing a separate “Profit” account is a game-changer. This discipline reshapes your financial perspective. It makes you solve your financial needs using your 90% by getting creative and cutting the fat (step 1). But it also means you have a financial nest to use whenever you need it most. And this is your greatest weapon.
How to build your sword: Make a new business account called “Profit.” Have your accountant (or yourself if you handle your company’s finances) set aside 10% of the business income into this account on a designated basis (weekly/fortnightly). Watch it grow.
3. Your breastplate: Bolstering your reserves
Where could you be hit the hardest, you would want a lot of buffer to take the punch. This is where your financial breastplate comes in.
Revision your reserves. We’ve entered an era where the unexpected is the new norm. Those three-month reserves? They’re baseline. Challenge yourself. Can you push it to six months? Or why stop there? Aim for a year. By stashing away this nest egg and perhaps even parking it in high-yield savings accounts (some dole out a sweet 4-5%!), you’re not just cushioning your business but preparing it to soar post-crisis.
How to build your breastplate: Use your financial review (step 1) to see where you can add more from where you have removed unnecessary costs. Get critical. Ask your financial advisors for help here, they can probably see where you can cut in order to start gaining.
Related: Creating the 3-Bucket Cash Reserve System
4. Your shield: Minds over money
Your shield is your buffer, which will be able to take any hit. How do you create a solid business buffer? You strengthen your people and company.
You’ve tightened the purse strings. Excellent. But now, let’s allocate those savings wisely. Begin internally. Your team, their skills, their growth — these are intangible assets. Consider launching a leadership book club. How about monthly self-development workshops? The essence is to foster a culture of continuous learning. When you invest in their growth, the dividends they pay back in productivity and innovation are exponential.
How to build your shield: Send out a survey to your company on what they would like to see done for personal and professional development. Start there.
5. Your chainmail: The contrarian marketing strategy
Your armor is almost complete. Ready to get out and fight? Your chainmail will strengthen you.
In stormy economic weather, many companies instinctively pull down the shutters, drastically slashing their marketing budgets. I advocate the opposite. Instead of retracting, expand. While competitors dial back from 100% to 20%, I say we amplify our efforts, pushing it to 130%. Do what others are not doing — this is where you will see truly unique results.
How to build your chainmail: While buying patterns may change during downturns, buying itself doesn’t cease. Ensure your brand remains front and center, ready to cater to this discerning audience.
Related: How to Lead Effectively in Uncertain Times
6. Your plate armor: Embrace agility and innovation
Your final piece to your suit of armor is your plates. And what do plates do? Protect your whole body. Let’s see how to protect the body of your business.
Innovation is key. Economic downturns often signal a broader shift. The market dynamics are evolving. Traditional models might be upended. It’s the CEOs who keep their fingers on the pulse and who are willing to pivot, adapt and innovate that emerge not just unscathed but thriving.
How to build your plate armor: It’s leveraging new technologies, exploring untapped markets or simply reimagining a product. Remember: Agility isn’t just an advantage; it’s a necessity. Keep new. Keep fresh. And keep innovating your business. Don’t get complacent just because it has worked alright so far. Get stronger, and get better.
Facing a recession is as much a test of your mettle as a leader as it is of your business’s robustness. It’s a clarion call to think deeper, act smarter and lead with a vision. With the battle armor we have built for your business together, you can think, act and lead AHEAD of time. You have now taken back your control in the face of uncertainty. You’re bulletproof. Economic downturn? Ha! More like “Bring it on, world!” You’ve got this.
This article is from Entrepreneur.com
