Will a Recession Kill You or Make You Stronger?

There has been much discussion of late about whether we are in a recession. To me, it seems like a lot of hair splitting, but to economists, who apparently believe in precision, there is some dispute. Nonetheless, there is no doubt that we are in an economic downturn of unknown duration and that many businesses will suffer.

Will yours?

Business owners should always have a deep enough understanding of their business so that they know how external changes will affect them.

Anybody doing strategic planning knows the importance of looking at all factors external to your business, over which you have less control. How can your competitors impact your company? What about another terrorist incident? And how about a recession?

Is your business recession proof ? If you think so, why? How can you make it more so?

We look at some big companies like Halliburton, Bechtel and many defense contractors and we see organizations that actually thrive in a crisis. They are built to do so.

Most of us are not set up to thrive in crisis. But what can we do to keep our businesses going in a crisis? How can we position ourselves to stay in the game, to make our products or services necessary to our market?

Big business does not leave chance to chance. Large corporations run different scenarios constantly, determining how they might be affected by different events and planning their best course of action to maximize their success under duress. Smaller businesses should do the same.

We can use a simple SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. Identifying these areas during a period of relative calm can serve an entrepreneur well when things get shaky. What are our company's true strengths? Our strengths relative to our competition? How will they serve us in a changed situation?

What are our weaknesses? How can we neutralize them? Will they be emphasized or de-emphasized in times of crisis?

What opportunities exist for us in the marketplace? How can we capture them and use them to our advantage? Which ones do we not yet have the capabilities for? Which ones should be identified as useful in particular situations?

And then the big one...What threats exist to our continued existence or profitability? If your company is one that provides vacations and guided tours of Iran, for instance, war with Iran would be a threat that would be devastating to your business. Perhaps you should identify the fact that all of your eggs are in a particularly shaky basket. Act accordingly- diversify, learn about other countries and offer tours and vacations there too. Develop a broader expertise.

If a war with Iran were to happen suddenly and you had done no planning you could be in big trouble. But what opportunity might be there? Perhaps you could use your expertise to help the Halliburtons and Bechtels and KBRs who follow the US into combat areas. Perhaps some prior planning would enable you to make some contacts in these companies in advance so that if a sudden change took place, you would already be positioned.

If you are just looking to assign the blame away from yourself, you can refuse to plan. When the crisis comes you can throw your arms up in the air and blame fate for sinking your business.

But if you want to stay alive to fight another day, do some pre-planning. Do a SWOT analysis and then use the information to create a plan.

Ideally, you will have a strategic plan that analyzes your internal situation and looks at the external conditions. Use your plan as a jumping off point for your strategy in a crisis.

A bit of pre-planning can go a long way. A recession is hopefully a bit more likely than another war. How do we keep going when America stops buying? Do we lay people off? Do we cut hours? Do we close facilities? Do we cut benefits?

Or do we find new ways to market? New groups to market to? Put a new spin on our products or services? People prioritize their expenditures when cash is tight. How do we get on the list of priorities?

Having a plan can help a lot.