Are you set up to thrive during a recession?

Are you set up to thrive during a recession?

With the shadow of a recession looming over our heads, businesses across New Zealand, and the world are starting to take a step back to assess what measures they have in place in order to look forward and (hopefully) beyond a dip in the global economy. As always, the best time to plan for a situation is before it arises, meaning that now is the time to assess your organisation and strategise for the years ahead. Those who are all over their planning, risk management, mitigation and issues management are the ones who will survive this period, if not thrive within it. Don’t get caught with your pants down as we head into an economic winter!

What is a recession?

It’s important to know what you’re preparing for, and everyone can use a refresher from time to time! There are two main types of economic downturn, one being a slowdown and the other, a recession. When consumer spending starts to level off, it’s referred to as a slowdown but when that spending starts to go backwards for a period of six months or more, that’s when we start to head into a recession. But a recession isn’t necessarily something you need to be afraid of, just prepared for. A recession is part of a healthy economic cycle, and what goes down always comes back up (and vice versa.)

What can you do to get ready?

Risk management is more than simply responding to a risk when it jumps out at you, it needs to be a constant conversation that evolves as often as the risks to your business do. A great tool in preparing for future risks is scenario planning, where boards can play out a potential negative situation to gauge their readiness and reaction. From this, learnings can be drawn, built on and then added to the toolbelt to strengthen an organisation’s resilience if that risk actually were to arise.

It’s also wise to assume that a risk doesn’t exist in isolation, they can often build on each other with more complicated results. Ensure that your strategies to mitigate and avoid risks encompass combined risks and the effects they might have on your organisation. 

Another excellent way to prepare is through environmental scanning. Reviewing the environment that your organisation plays in to see how competitors and consumers are acting. Are there any trends with the behaviour of your customers? Is your main competitor on a hiring freeze? If they are pulling back, does that open up an opportunity for you? Analysing the behaviour of like-minded companies and of the customers who engage with them allows you to assess what your biggest risks might be if hit by a recession and what the potential actions are that might help you mitigate it.

Don’t let fear stop you from communicating. The worst thing a company can do when preparing for a downturn is to stop talking to their staff - if you’re fearful, imagine how they must be feeling. Ensure your internal communications are spot on and staff are involved in identifying risks and opportunities, as well as showing them that they will be part of the solution. 

In order to retain your valued staff, manage your cash flow in a manner that allows for contingencies that will see you through any potential drop in sales. Don’t assume that to cut costs you have to jump straight to lay offs as research has shown that companies that focus on cost cutting generally emerge from the recession worse off than those that prioritise growth.

Light at the end of the tunnel

Just like all things, a recession will eventually come to an end so instead of going into your shell and bracing for impact, there are actually a few upsides you can focus on. Preparing for a slowdown or a recession can give you the time to take a step back and evaluate your company and its readiness for any significant event, as well as ensuring your staff are well trained and your business is productive.

How Govn365 can help

The Govn365 assessment and Maturity Index gives Directors, Chairs and CE’s complete visibility of business activities so they can make informed decisions and plan appropriately. Developed alongside international governance standards (ISO 37000) and industry leading practices, Govn365 is the quickest way to accurately profile your business. Planning for the future starts with understanding the now, reach out today to discuss your free trial and how Govn365 can help your organisation plan for any future ahead.

- Govn365