Leading through a Recession
Current economic times call for innovation, flexibility, a change of focus, and adaptability in business. And all of this can make a company stronger and better able to compete in the coming years.
- Nobody likes to see their friend, neighbor or family member lose a job, and certainly rising unemployment is disheartening for many. The recession, which started in 2008, and will probably continue through 2010, is a natural part of a progressive economic cycle (regardless of the initial catalysts). That doesn’t mean much when you are having trouble paying bills, in danger of losing your home, or worried about your finances.
- A recession can be difficult to endure. However, there are positive aspects as a result of this recession that we need to remember.
It is forcing both companies and families to look hard at their finances. For the first time, sometimes in the course of a marriage, husbands and wives are sitting down and talking about their financial situation. They are figuring out the terms of their mortgage, the annual percentage rates on their credit cards, and they are taking a hard look at their expenditures. Families are prioritizing what is important to them, and they are spending money based on those priorities. They are finding that they need fewer high-end and duplicative products.
- Companies are doing the same. Responsible companies are looking at where their resources are allocated and making decisions based on company priorities and profitability.
Companies, like families, are reducing waste, being mindful of their spending, and making adjustments. Companies are discovering that if they do not provide value, patrons will go elsewhere. For businesses that are flexible, responsive, and value-oriented, this is a great opportunity.
- Entrepreneurs who started a business and struggled with it for years and finally closed the doors this year should be encouraged. Without a recession, maybe they were just going to continue to struggle for 20 years. Maybe it really wasn’t the right business. That is a great advantage in a capitalistic society. The “invisible hand,” the term coined by Adam Smith in 1776, ensures that people have the opportunity to engage in businesses where they can either succeed or not, but the market determines ultimate profitability. So, if you develop a terrific product, it will probably be terrific in any economy. If you have a product that is poor or mediocre, it is probably not going to survive a recession. The good part about that is that is then you get out of a business or product that is poor or mediocre, which opens opportunity for a successful endeavor.
- Both families and companies are being creative and innovative. What we implement during tough times is going to make all the difference in how well we succeed when the recession is over.