There is a famous Jack Welch quote where he says. “Never miss out on an opportunity like a good recession.” I also like the Sam Walton quote, “I was asked what I thought about the recession. I thought about it and decided not to take part.” Both of these leaders understood the importance of keeping a strong positive leadership mindset. We cannot control external events, but we can control our response to them. The truth is that well led companies can actually benefit when there is some economic turbulence in the market. Competitor vulnerability creates opportunity. High performing leadership teams will figure out better ways to conduct business through innovation, cost management, calculated risk taking, and strategic action.
If your company is doing well when the majority of companies are doing well, are you really doing anything special? Is it your leadership/or business model that’s delivering the results or is it the rising tide that’s bringing you along with it. Think about it. If your market is growing by 10% per year and you’re growing by anything less than 10%, you are actually a below average performer. We were recently fortunate to be in one of the longest bull markets in the history of business in this country. Interest rates were also at record lows for a prolonged period of time. What better time to start but grow a company? A large number of business owners generated significant wealth because they happened to get the timing right not because they were especially talented.
But, then COVID-19 happened. Instead of the market ruthlessly weeding out underperformers or those with weak balance sheets, the government decided to prop up all participants in the marketplace through the Payroll Protection Program (PPP), Employee Retention Tax Credit (ERTC), Economic Injury Disaster Loans (EIDL), and other initiatives. So, in the midst of a pandemic, it was nearly impossible to fail at business if you took advantage of all the bailout opportunities. Employee were similarly supplemented to the degree that many of them decided to stop working altogether or shift to a part time schedule. Think about it. During a once in a century triggering economic event, our country still maintained very low unemployment levels. In fact, in a majority of cases, pay levels rose due to supply and demand issues. America’s economic prowess only strengthened relative to our geopolitical competitors.
However, eventually markets correct and we are in the process of seeing that now. If you aren’t on top of your numbers, raising the individual performance bar, in tune with your customers, strategically investing in business development, improving your business model, and exploring M&A opportunities, then economic reality will begin to seep in and slowly overwhelm your organization. While other poorly led companies start to worry about survival and cut costs across the board, freeze investments, and take on low margin work, you should double down on success. In my experience and from what I have studied, high performing companies actually gain market share and acquire significant talent during a downturn. They may see some short-term drops in profitability, but their cash management strategies deal with this issue and they continue to build financial runway. They perfectly position themselves to seize available opportunities and ride the wave of success which inevitably follows any downturn.
Don’t panic, but don’t be passive either. Lean into the current recessionary environment and make bold proactive moves from a position of strength and strategic courage. Avoid the inclination to hunker down and wait it out. If you are stuck in survival mode, then regroup and come with a plan that will reorient your leadership team to begin embracing success principles as soon as possible. There is always a way out and up.
I recently came across and like the following quote by Pastor Mark Batterson which I found inspirational:
“The greatest regret at the end of your life will be the lions you didn’t chase. You will look back longingly on the risks not taken, opportunities not seized, and dreams not pursuit. Stop running away from what scares you most and start chasing the God-ordained opportunities that cross your path.”
Be the CEO/Owner your company needs right now. Compete aggressively and lead by example!