The Recession Battle

Going Into Battle

Prepare for a recession by thinking through the details of how it will affect your business. For instance, if your bank tightens your credit line and your customers are taking longer to pay, while at the same time your vendors are demanding timely payments, what will you do? Remember what General Patton said: “A good plan, violently executed now, is better than a perfect plan next week.”

One tried-and-true offensive strategy is to stockpile cash (your equivalent of ammunition). My rule of thumb is to have at least three months’ worth of operating cash stashed away, and getting through a recession may require even more. Practice strong cash management by putting a full-court press on collecting receivables. Give someone the job of fire-fighting customers who take 60 or more days to pay, and conduct payment-history checks on new customers. Maximize or renegotiate longer terms on your payables. Doing this takes effort, but as the good general said, “A pint of sweat will save a gallon of blood.”

The Element of Surprise

During a recession, going about business as usual means you’ll lose daily battles in a declining economy, and eventually lose the recession war. The only way your company can survive is by “attacking rapidly, ruthlessly, viciously, without rest. However tired and hungry you may be, the enemy will be more tired, and more hungry. Keep punching,” General Patton said.

Instill a sense of urgency: Remind everyone in your company that promises get broken and expectations get crushed. Be prepared for unexpected situations such as regular customers reducing or even stopping their orders, competitors slashing prices and creating an industry-wide price war, or a major supplier going out of business.

Put mass and economy of force into achieving security,
diversifying income sources to reduce dependence upon the areas most affected by recession. If you produce luxury items, for example, now would be the time to diversify your product line to include more staple products. A slow economy can be good for those who take calculated, educated risks and think outside the box. (Or as General Patton said, “If everybody is thinking alike, then somebody isn’t thinking.”)

Be In Control
Two more words of wisdom from the military: good leadership. Now, more than ever, your employees need to know that you are in control and are going to lead them through the recession’s minefields. Explain your vision of how a recession affects your business. Communicate your battle plans clearly, concisely, and regularly.

And don’t hang out in endless management meetings analyzing the numbers ad nauseam! Be involved: at the front line talking to customers, at the back line checking on production, and every place in between. Great military leaders gain the respect of their soldiers through their actions, not through their words. As General Patton said, “Do everything you ask of those you command. Do more than is required of you. Say what you mean and mean what you say. Wars might be fought with wea-pons, but they are won by men. It is the spirit of the men who follow and of the man who leads that gains the victory.”

So, my fellow commanders, are you ready? Is your enemy defined? Are your goals and vision clear? Generals, lieutenants, and soldiers trained and ready?

Remember this advice from General Patton: “You’re never beaten until you admit it,” so carry on!