The specter of a double-dip recession is rearing its ugly head after the unprecedented downgrade of U.S. Treasury securities and last week’s ensuing stock-market turmoil. What can your business do to survive if another recession strikes? I suggest you start by doing three things:
1. Cut Unnecessary Expenses
“Unnecessary” is the keyword here. Take a good, hard look at your expenses and figure out what you absolutely need and what you can live without. Work with your accountant, human resources director and other leaders to come up with a list of things you can cut from the budget. Do simple, commonsense things first, like limiting color printing, buying used hardware, using video conferencing to cut travel costs, negotiating lower rent from your landlord, and curbing employee benefits.
Hopefully doing these small things will be enough so you won’t have to make major sacrifices later. The leaner your company is, the better your chances of remaining afloat in hard times. You’ll also be able to safeguard your most important asset – your workers.
2. Hold on to Good People
You might be tempted to cut your staff to make ends meet. But this is a dangerous choice for two reasons. First, you could cripple your ability to make it through the recession if you get rid of your best and brightest people. Sometimes it’s not easy to see all the value someone provides, so you have to be very careful in choosing who to let go. Second, layoffs have a detrimental effect on the morale of the employees who are kept on board. They may wonder if they’re next. This could motivate them to work even harder, but it could also lead to greater stress and less efficiency.
If you do need to let staff members go, you should do your best to communicate clearly the reasons for the layoffs and explain how the company is working to get back on solid ground. This will help calm your remaining employees’ fears and give them hope for the future. If you try to help the employees you let go find new jobs, you can build a lot of goodwill and keep relationships alive. You never know when those bonds might come in handy.
3. Improve Inventory Management
Most companies’ biggest expense is their inventory. Unlike employees, inventory can be dramatically cut and actually improve business operations. Moody’s Investors Services said in a recent report, “We think investments in inventory management technology in the years leading up to the recession, coupled with a disciplined mindset and rational competitive behavior, made retailers more efficient when they entered the 2007-09 recession than they were during the last recession. Days inventory on hand, a measure of efficiency, was about 84.5 days in 2009, down from 92.4 days during the 2001 recession.”
Fishbowl has become a popular tool for businesses in the last decade, for good reason. They don’t have to settle for using Excel or hand notes to keep track of their supplies. Using Fishbowl is a great way to cut unnecessary expenses, make employees more efficient, and use resources more wisely. Retailers like Macey’s, Dillards, Kohls and many others have used it to thrive, even as shoppers spend less.
Help your company survive a potential double-dip recession by making these three smart moves.