Leveraging lessons learned from the 2008 recession to prime your business for success
Statistically speaking, the majority of businesses around today didn’t exist during the 2008 recession. According to JPMorgan & Chase Co., “51 percent of small businesses are 10 years old or less.”
And you’re likely already familiar with the daunting survival rates of small businesses in general: About two-thirds last two years, and only one-third of those make it to 10 years.
Those stats are discouraging under normal circumstances—and 2020 has been far from normal. Those of us who did power our organizations through the 2008 economic crisis are having to put critical lessons learned from that difficult time into practice now. Those who don’t have the benefit of past experience are struggling to figure out how to return to a new “business as usual” and how to navigate the economic uncertainty of a post-pandemic business landscape. And, while there are lessons from prior economic downturns that can be leveraged as business leaders proactively navigate next steps, there are unique circumstances now that will influence how those past lessons should be applied.
No matter where you fall on the business spectrum, opportunities still exist in challenging times. The most important thing to remember is that as you encounter threats to your business you should always look through the lens of opportunities they present, evaluate your strengths and weaknesses, and develop a plan centered on leveraging those strengths and mitigating your weaknesses. Below are some tips that will help get you started.
Make an Objective Assessment
Business leaders who want to position their organizations for success amidst strenuous financial times need to take a thorough, honest look at their infrastructure and overhead and conduct an objective value proposition analysis before embarking on a plan. This may take time but it’s time worth taking. Acting quickly without all the relevant information may resolve a problem short term but it typically will not set a company up for long-term sustainable success. To implement a strategic plan requires discipline and forward thinking and many have failed because they have not thought ahead and protected their businesses proactively.
Taking a pause and evaluating your business can be difficult when you put every ounce of passion, effort, and enthusiasm into growing your business. You’d prefer to continue on this same course, but this type of impartial evaluation is a necessity for truly understanding where and how you can run your business smarter, trim excessive costs, and operate in a leaner, more efficient manner. It can also expose opportunities—places where you may be undervaluing an aspect of your business and failing to maximize its profit potential.
Start by asking yourself:
- What aspects of your operations are absolutely necessary for driving your economic engine?
- What can you reduce or fully eliminate without weakening the products, services, or value you provide to customers?
- Where can you consolidate efforts or reduce redundancies?
- Where can you lower the cost of revenue for products or services you provide?
- Are your retained cash earnings at a level that is high enough to carry you through the potentially lean cash flow in months to come?
- Is there something your customers will place a higher value on than your current pricing model assumes?
While some of these questions may seem elementary, they provide a starting point for decision makers who may be so overwhelmed they don’t know where to begin.
Don’t Compromise Quality
Any changes to your infrastructure or operations should not impact the quality of your product or service or negatively affect the customer experience.
For instance, at Village Green, the apartment management company I currently lead, we’ve implemented several cost-effective automated processes and procedures behind the scenes that are virtually invisible to our customers. Other new automated processes are visible but have improved our ability to deliver an exceptional experience—so customers are more open to accepting them.
Even simple changes, like automating resident service requests, helped us realize new efficiencies that saved time and money. But with every alteration, we asked ourselves how the new process would affect customers. If there was any chance of decreasing our quality of service, it went off the table.
The pandemic has forced many business leaders to think differently about how to maintain business continuity and maximize profitability in light of unusual restrictions. These challenges will likely be with us well into the future. But many businesses are addressing them in ways that not only maintain quality for customers but actually improve it. For us, demand for virtual RFPs and virtual apartment tours has skyrocketed. Telehealth doctor visits in the medical industry are another example.
These virtual interactions still meet customer needs, but, when done right, they also give businesses a chance to provide a personal touch and individual experience that sets your operations apart from the competition’s.
Find ways to embrace these changes, continue to leverage them, and make them your own in a way that allows you to deliver your products and services without compromising an ounce of quality.
Perhaps one of the biggest lessons we learned during the 2008 financial crisis is the importance of having a strong culture.
While it may seem counter intuitive to focus on culture at a time when you need more revenue and less cost to stay afloat, it’s important to understand employees who are bought into your philosophy are much more likely to help you pivot quickly and make necessary transitions during difficult times.
In this sense, the idea of culture goes further than having a foosball table in the office or happy hours on Friday afternoons. It requires business leaders to move past results- and action-based narratives to think deeper about how to influence beliefs and experiences.
Some tips for accomplishing this include:
- Transparent, constant, and consistent communication among all levels of your company
- Going big on actions that demonstrate your authenticity and empathy to employees
- Shaping and reinforcing shared beliefs in every meeting
- Leveraging virtual experiences to build and sustain relationships
The 2008 financial crisis was devastating to businesses across the country, and the COVID-19 pandemic has shown us that we, as business leaders, need to be prepared for the worst to happen at any moment. Those who learned and implemented lessons from the 2008 recession have likely fared better through the choppy waters of this pandemic. Likewise, how you adapt and survive now will serve you well into the future, enabling you to better withstand the next economic threat to your business. These considerations—realistic assessment of the business, a commitment to quality, and prioritization of culture building—can help you get back on track quickly amid economic uncertainty, and set your business up to thrive when things return to “normal,” whatever that may be.