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 from some economic turbulence in the market. Competitor vulnerability creates opportunity. High-performing leadership teams will devise more effective 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 fortunate to be part of one of the longest bull markets in U.S. history. Interest rates were also at record lows for an extended period. What better time to start and grow a company? A large number of business owners generated significant wealth because they happened to get the timing right, not because they were exceptionally 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. Employees 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 has only strengthened relative to our geopolitical competitors.
However, markets eventually correct, and we are currently witnessing this process. 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. Based on my experience and research, high-performing companies tend to gain market share and attract top talent during economic downturns. They may experience some short-term drops in profitability, but their cash management strategies address this issue, allowing them to continue building a financial runway. They strategically position themselves to capitalize on available opportunities and ride the inevitable wave of success that 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, regroup and develop 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 liked 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!