The 4 Rs of Managing a Business Through a Recession For entrepreneurs who are willing to take advantage of opportunities, recessions can really be a time of growth. Here are 4 Rs for profiting from a downturn.
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The macroeconomic environment of today is characterised by high inflation, low consumer confidence, awful stock market performance, and rising interest rates. Consumer and business discretionary expenditure are both at historic lows, and few economic sectors are immune to the current doom.
It's common for business owners to prioritise survival over expansion in these circumstances. Recessions, however, can really be advantageous for companies who are prepared to seize the opportunity.
"It's a time when the best companies emerge, grow stronger, and are able to carve out a niche. Additionally, now is the time to stregthen the core processes and systems, fixing gaps in the business and making it leaner, more focused and driven," according to Harold D'Souza, Co-founder and Director of an executive search and talent advisory company, WalkWater Talent.
There are many companies that were established or expanded during a downturn in the economy.
Hewlett and Packard started out in the subsequent recession in the late 1930s, whereas Disney was created at the start of the Great Depression in the late 1920s. The other businesses that prospered in the Great Recession of 2008 include Netflix, Citigroup, Groupon, and Lego.
Related Article: 8 Ways Entrepreneurs Can Achieve Massive Growth During a Downturn
In a downturn, the following are the strategies (4Rs) for success:
Re-look: at areas of the company that are a waste of time and energy. These could be investments in products or areas that had unrealistic goals, or investments in individuals whose skill sets might not be in demand right now. Costs will be reduced as a result, and businesses will last longer.
Re-frame: consider any necessary pivots in focus areas that are more in line with the state of the market. Pay attention to balanced growth while keeping long-term goals in mind.
Re-energize: means demonstrating a high level of attention and enthusiasm to the team, investors, and ecosystem in order to avoid any motivational lulls.
Re-alise: as a leader, face the realities of the business, including the things that won't work and the difficult choices that must be made.
Also Read: Strategies for Startups to Overcome the Funding Winter
