What companies should do to prepare for a recession – The Six Force Plan
By Philippos Hadjizacharias
Managing Partner, PHS
16 Sept. 2020
Someone can say that an economic recession is a natural stage of an economic life cycle, hence managing a
business can present unique challenges for business owners, CEOs and employees. No-one can predict
precisely when a recession will happen, how long will last and what the impact will be for businesses,
however there is always an indication of what is coming tomorrow.
Facing the challenges of COVID19, the luck of new investment opportunities, the cash deficit from tourist
industry and services in general and the limited cash availability in the market, it is clear enough that a
recession is knocking our door. Once you understand this, you can better prepare your business and your
workforce for an economic retraction.
We, at PHS, managed to overcome the last two recessions, 2013 and 2020, by identifying the strategies
on how a recession might impact our business and how to handle it. Here are the six strategies, “The Six
Force Plan” for your attention:
1. Cash Flow Protection (Internal factor)
Cash flow is the blood of your business. As less cash inflow will be generated, you should make sure that
less cash outflow should be paid out. We have called it “The cash-in cash-out balance”. It’s far easier to
control your cash outflow, as it is an internal factor rather than to control your cash inflow. The less you
spend the better. Prioritize your expenses and make sure that you pay the first ones first that might impact
negatively your ongoing business.
2. Make the most of existing clients (Internal factor)
The key here is “provide exceptional quality of product/service to your existing clients that will exceed their
expectations”. Ensure that your clients love what you do for them and keep them extremely happy. By doing
so, your clients will not shop around, hence you will have loyal clientele.
3. Personnel awareness (Internal factor)
For most of the businesses and most particular for the businesses offering services, personnel are the
cornerstone of the organisation. You should speak openly to them about the actions and strategies that need
to be taken by the company in order to overcome the recession unscathed. The key is “TEAM” (Together
Everyone Can achieve More) You should make this discussion as friendly as possible, in an excellent
environment and mood. Employees should not be demotivated at all. Key phrases that they need to hear
from you are, job security, achieve goals, work as a team, take initiatives, hard times will fly soon, client’s
satisfaction etc.
You should encourage and reassure your staff about their future and the opportunities coming ahead.
4. Keep Positive Thinking (Internal factor)
“Don’t think about what might go wrong, think about what could go right”. You should focus on the good
things and you should communicate on a positive tone with your clients and staff.
5. Competition – New clients in (External factor)
Having new clients during recession, proved to us that it is much more easier. You should differentiate
yourself from your competitors, show to people that you are not only still alive but even stronger. Clients
need solutions, so make sure that you are ready to give them what they want. Keep running your ad
campaigns.
6. Emergency Financial Backup (External factor)
Having a Financial backup plan undermines your likelihood of success. You should apply for a temporary
credit facility from your bank institution and the money should be kept untouched for as long as it is
possible. You should reach your limit and most importantly you should accomplish points 1-5 before you
use this credit facility.
Conclusion
Our Six Force Plan teach us that the way to exit successfully during recession time, you should mainly focus
on your internal factors, meaning that it depends on you and how to deal with it. So, the better you are
prepared and best implemented the internal factors, you will ended-up having a stronger business in the
future.
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If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in the contact form below.
We will take you through a step by step process from A to Z in creating the perfect business structure in Cyprus.
Can’t wait any longer? Become even more successful by working with accountants you can count on and be among the thousands business that already did.