Experts tell us our economy is strong and getting even more robust. If they’re right, it’s undoubtedly good news. But to me, it’s not time to celebrate; instead, we should be preparing for the next recession.
Good times are always the best time to prepare for the worst—the question is not if you’ll get hit but when. During good times, you have the financial and staff resources to shore up against a downturn, and you’re in the positive frame of mind you need to solve the inevitable problems headed your way. You can’t get ready for a tornado when the wind is buzzing through your town, and you can’t protect your employees’ jobs when revenue has already dried up.
I learned this from a painful experience in 2008, when the worldwide financial crisis hit Signarama, the business I had started in 1986 at the ripe old age of 23. We recovered and, since then, have been through everything from the pandemic and its recession and all the wars and crises in between. (The words “supply chain delays” can still put me on alert.)
Thousands of startups have come along since the recovery and coped with economic storms, but nothing has compared to what we went through in 2008-2009. When the next tsunami hits, those who have prepared—whether startups or long-established companies—will be glad they took the time to prepare instead of assuming disaster can’t strike them.
Here are four strategies that got us through our nightmare in 2008, and how others can weather the next storm more rationally:
1. BE POSITIVE EVERY DAY
How else can you be if you expect to turn things around? Proclaim doom and gloom? When their leader is pessimistic about the company’s future, employees can feel like there’s no use trying to fix the situation.
By 2008, Signarama had been growing for more than two decades, with no sign of stopping. We certainly didn’t see the Great Recession coming—at least not as bad as it ended up being. Suddenly, the idea of seeing the company succeed in the future seemed like a long shot. Surviving meant figuring out how to get through that crazy time. Day after day, I had to be the face of the company, staying positive and making moves to get us through it.
Tough as things got, adversity brought some positives. Being a Christian helped tremendously as I prayed to God for help and healing. I even had a friend who prayed over me during this time. I was able to speak to my dad, who was spending every other weekend with us while battling cancer. I’ll never forget his wisdom and advice going through it. He was very calm and calculated, and reminded me that we needed to get through it for the larger group of employees who were staying.
We emerged stronger, a better business and, I think, better people for the pain we endured.
2. LOOK FOR OPPORTUNITIES EVERY DAY
There are actually more benefits to starting a business during a downturn. Locations become available, often at a reduced rate to entice occupancy, and you usually have a good labor supply.
If you’re just starting up, research your industry and see how your future competition performed in previous recessions. Use the information to show potential investors how you are different and represent the solution for the future.
And, of course, once you know where you want your new business to go, work harder than everyone else to get it there.
3. GET BACK TO BASICS—TODAY
Technology and the internet have become invaluable tools for building business, but the personal touch has to remain. Now—before trouble looms—start attending networking events. Pass your card, hand out flyers, make some calls. These efforts will pay off when you’re struggling, but you don’t want people to think you only care when you need them.
For the same reason, don’t ignore your customers until it looks like you may lose them. Call customers today and find out what they want. At Signarama, during that terrible recession in 2008, we went after anyone who had a billboard or was running commercials on TV, which was a sign they were growing and had the money to spend on advertising. But we could have done the same thing when business was good.
Celebrate when you have a victory—new customers, higher revenue, or simply making it to Friday. Reward the employees who helped you succeed and do it publicly.
4. SAVE FOR THE FUTURE
Saving for the future is no longer a luxury; it’s a necessity. Take steps now to build up your cash reserves and pay down your debt, including lines of credit. Borrowing should be your last resort, but if you’ve exhausted other options and it makes sense for you, you’ll want to qualify for the lowest possible rate. I recommend setting aside a specific amount for savings each week and debt reduction each month. The amount isn’t as important as sticking to it consistently.
PREPARE TODAY AND ENJOY TOMORROW
You can prepare for anything if you work on it and have a plan. Seeing it coming is relatively easy if you know the signs and you’ve been paying attention; heading it off is more difficult. The time to change is before you must. Your company may survive layoffs and salary cuts and come out stronger, but preparing now may mean you’ll be strong enough to endure a downturn without resorting to those solutions.
