THE REAR VIEW MIRROR: Recessions come and they go – how to navigate them successfully
By David Josephs
The clocks changed at the weekend, and we can now look forward to four months of darkness, he wrote ironically. Bear with me, this column WILL contain some cause for optimism, even if the current outlook is bleak. War in the east casts a terrible shadow over everything. Prices are rocketing, causing stress and hardship. We’re most likely in a recession. So what are my grounds for cautious optimism?
Recession: a definition
Recession is a poorly understood concept. I suspect if I asked you to define a recession, you might struggle. The technical definition is thus: two successive three months periods in which the economy has shrunk rather than grown. So if your economy stands at 100 at the end of Q1, but has fallen to 99 by the end of Q2, and 98 by the end of Q3, we’re in a recession.
That does not signal the end of the world as we know it. It does mean that vulnerable people and companies may struggle, and certainly the state should give some consideration to supporting individuals who are facing poverty. We have enough money to ensure that no one goes hungry or faces a choice between switching the heating on or having a warm meal.
Five elements to surviving, and even thriving, through a period of recession
Strong and well managed companies will survive the recession for sure. They may face more difficulties than normal, but they will certainly survive. That’s why the following issues are critical for me, and I’m at the point in my career when I’ve worked through many recessions, so speak with some experience.
1. Surviving a recession may require some tough decisions. If a part of your business is struggling, it may be best to close this part of the business to ensure the continued strength of the main entity. When you’re ill, it does not mean your entire existence is at threat, as long as you treat the illness swiftly and appropriately.
2. Cash is king. Good businesses have a strong finance department. They issue invoices in a timely manner. They collect cash ruthlessly. This is absolutely essential. You always need cash.
3. Things will get worse, and better, more quickly than you predict. We may well be at the worst point in this recession already. Think of the injuries inflicted on the global economy in the last 30 months: the pandemic, the war in Ukraine, spiraling energy costs, inflation, the damage to consumer confidence. It is an extraordinary combination of events.
4. The natural instinct of many when faced with a recession is to consider redundancies or hiring freezes. This is nonsense. If you have good people, cash in the bank, and a sound business model, you need to retain those good people and attract more people to support them. If you reduce your staff count, you will be too slow to react when the inevitable upturn in fortunes arrives. Be strong.
5. Keep communicating. Of course, I would say this. I’m a comms person, and I work in the comms industry. But reputation is everything, and you have to work on it. It’s tempting to cut marketing budgets in the face of challenging trading conditions, but it’s counter-productive and only like to hasten your decline.
Here’s my prediction. 2023 will be a challenging year for us all. 2024 will be much, much better. Technology enabled businesses will continue to thrive. Have confidence, don’t panic, and all will be well.
David Josephs
ABOUT ME: I’ve worked in the PR industry for 30 years, and have advised tech companies of all shapes and sizes ever since. My experience extends across Europe, the US and the Middle East. My posts for Laika aim to share some of those experiences to help you make the most of your investment in PR. I’m proud to serve on Laika’s Board of Advisors, and support the team through training sessions and one to one guidance.