Ever wondered what you will do to your company if recession strikes the global market again? Like 2008? Your newly built company might crash overnight if you do not make the right decisions at the right time. Market analysts and Business researchers have come out with several masterstrokes which can possibly save your sinking ship in the storm. Here’s what they have to offer:
- The right time to deleverage: If you observe two consecutive negative economic growth of the market, that is, recession, try to reduce the amount of debt you have in the market. Rebecca Henderson, a professor at Harvard Business School, tips not to run out of money. Her advice is not to crash your company. Try to reduce the amount of debt as much as possible as companies with higher debt stand on the plain of higher vulnerability.
- Decision-making should be apt: A company stands strong during bad days due to right and firm decisions. There should be a balance between centralization and decentralization of the directory board. Several researchers at MIT, Harvard, Stanford, and College de France have discovered that, on the one hand, a centralized board gives a company the autonomy to make firm decisions. Conversely, a decentralized board takes you down to the local interests. During the recession, be a person of balanced views and take decisions accordingly.
- Layoffs to be re-examined: Of course, you cannot run your business with full potential and capacity during a downturn. And it indeed is a hard decision to discharge your trusted workers. That is one of the most challenging choices. In 2009, 2.1 million Americans were laid off due to a shortage of whatnot! An esteemed team led by Ranjay Gulati has studied the public companies of the US and concluded that companies with a lesser number of layoffs did hold the grip of the whimsical period after the recession more firmly. Instead, they focused on operational improvements and had the last laugh.
- Tech-oriented investment: The opportunity cost in technology is lower than the usual good time. Your operating cost will be higher during good times as your product is in demand. But once recession strikes, you can spare that massive cost and invest in technology, so you do not miss out on the aftershock trend. In the meantime, you can rearrange your institution to be more flexible, transparent, and user-friendly. By the by, tech helps you to become a ‘self-funding’ organization by cutting down extra costs.
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A recession will indeed affect your company once it hits the economy. A skillful and intelligent entrepreneur will always look for avenues to deal with it smartly. In the future, solutions may change accordingly. As a businessperson, you also need to be ready and steady for sudden hurdles.
