Preparing your organization for a recession
Whispers of Canada heading into a recession are a recent hot topic. While some economists predict we’ll see a change in approximately two years, others are forecasting the recession to hit as soon as next year.
What is a recession?
A recession is often defined as two successive financial quarters of decline in economic activity. One economist recently defined it as a broad-gauged decline in economic activity
Increased interest rates are already slowing down Canada’s economic growth and will continue to do so until the end of the year. That said, there has been a major surge in savings, providing a buffer for consumers to continue spending their money, update their homes, and take vacations. Despite Canadians being willing to spend however, some businesses are currently not in a position to supply them.
In terms of employment, we’re at a record low of 4.9%. Although many may be worried about a recession, it appears that job openings are growing faster than the number of applicants.
How you can prepare your organization
01. Give yourself a financial cushion
Although it may seem obvious, one way to prepare yourself is by giving your organization a financial cushion. Do whatever you can to keep more cash flowing in than out. Trimming the fat is one strategy – negotiating lower rent costs, exploring better rates from suppliers (or finding new ones), cutting back on monthly expenses, and securing long-term customer deals for a little less money.
Another option is to maximize your margins wherever possible – focus on your products and services with the best margins. Those with high overhead and low return should be placed on the backburner for the time being.
If you’re a not-for-profit, make plans to ramp up your fundraising. Remember that it isn’t insensitive to ask in times of challenge. Those that support your mission will continue to do so, regardless of the economy.
02. Stay connected
If you haven’t already established your organization online, it’s time. Now more than ever, we’re buying, selling, managing, and operating digitally and on the cloud. Not only will you increase your customer base, but digital solutions are generally inexpensive.
Some online options include:
- Email list management software: Make communicating with your customers and potential customers easier and more efficient.
- Website platforms: Many include drag and drop features which make site building simpler (and more fun).
- Cloud-based storage: Protect, organize and share files quickly and easily. In many cases, you can also have backups of these documents – eliminating situations where you blame the intern.
03. Be willing to adapt
It’s growing increasingly important to better serve your customers – without them, how can an organization survive?
Particularly in a recession, it makes more sense to try something new, rather than cling onto practices that don’t work. In 2009, Domino’s Pizza sales were at an all-time low – their executives knew, directly from customer feedback, that the food quality wasn’t there. As a result, they changed their 50 year old recipe, launched a campaign about their new taste (while poking fun at their previous savory shortcomings), and eventually updated their ordering system technology to appeal to a younger generation of customers.
Doing things a little differently isn’t a bad thing. Take a good look at every opportunity and see what’s possible.
Remember: Always look ahead at what may be on the horizon for your organization. You’ll be better equipped to anticipate challenges, making you more likely to overcome them – and outperform the competition.
