Recovery-3 things to do now to withstand the next economic downturnChia-Li Chien, Ph.D., CFP®, PMP®, CPBC
Chia-Li Chien | July 03, 2013
In a previous article, we talked about the Business Owner Blues. It felt that discussion was not complete without expanding on how economic crisis and recovery can determine whether or not a business owner will have something to show for the years of hard work and dedication.
If the business survives a downturn, the follow-up question is what will you do during recovery? Will you now be willing to make an investment in the business—which doesn’t always mean a financial investment? It may mean time, research, and most importantly, as we discussed in that previous article, re-visiting your business model and doing what it takes to build a firm foundation to withstand the next cycle.
Are you up to the challenge?
Did getting through this last downturn bring on business owner blues that you can’t seem to shake? Do you honestly just get tired thinking about riding out the next economic storm? Does the aspect of recovery still not inspire you? Then consider this —if you can start to build a foundation step-by-step now, it will enable you to withstand the next economic downturn.
So where do you start? Well, not to sound like a broken record, but take a look at your business model first thing. It’s not that painful, and if you don’t go ahead and do that now, your business could be hurt even as recovery becomes stronger, or worse case scenario, do worse than you had been during the downturn due to newly recovering market conditions.
I recently had a client come to me in a financial crisis that may have stemmed from several years of economic turbulence. My recommendations for them included, of course, changing their business model as well as diversifying their client base. This client did not want to take the time and make the sacrifices that changing the business model would require. They did, however, diversify their client base over a period of time.
Well, fortunately for them, they had such good results by diversifying, that they realized their business model was changing anyway. It was time to intentionally put some thought, ideas and creativity to work to make that business model a solid starting place for any other initiatives they decided to make, and as a defense against another financial crisis. They realized their recovery would not be complete without a new business model.
A firm foundation built now will help you both in the immediate and long-term:
• Overcome strong competitors
• Establish processes, checks and balances that control your P&L
• Build a business platform that can increase your business value
Let’s focus on that first bullet. Because in my experience, many business owners focus on the wrong competitors. You see, in my opinion, a business’s biggest competitor is timing.
In my latest book, Work Toward Reward, I discuss three types of timing:
- Personal timing
- Business timing
- Economic timing
Notice something about timing? Think about it for a moment. Can you control numbers one and two? Yes. With hard work, planning and guidance, you probably can. Can you control number three? Economic timing? No. I can’t, you can’t, your partners can’t, your spouse can’t—well, you get the picture. Which gets us back to being proactive—taking control of what you can control— to make sure you not only survive the next downturn—you perhaps even thrive in the next economic shift.
So here they are—the 3 things to do during economic recovery to build a firm foundation against the next downturn:
• Decide you ARE up to the challenge and willing to make the investment in your business
• Build that foundation step-by-step, starting with your business model
• Don’t try to control economic timing, but do consider personal and business timing
We all want to come out on the other side of recovery better, stronger and tougher.
Building the right foundation is the best way to make sure that happens. Please let me know if I can help you step-by-step, start to build that foundation now, while recovery is on the horizon.