We shouldn’t ever be surprised by a recession. After all, everything is cyclical, and the market is no different. So, we know they’re coming! Instead of fearing or dreading recessions, future-forward business owners can embrace, and prepare for them and the opportunities they bring.
I recently read an interview with Jack Stack, the CEO of SRC Holdings and the author of The Great Game of Business and, most recently, Change the Game. In the interview, he shares what he does to prepare for recessions and provide security for his employees while jumping on hot opportunities.
In this post, you’ll learn how to design your business in a way that prepares for the future so you and your employees can feel confident and secure through the inevitable ups and downs.
How Stack Does It By Design
Jack Stack is at the helm of a “mini-conglomerate of diverse companies.” Despite having 250 employees and over $600 million in annual revenue, he runs his companies using “open-book management,” which means financials are shared with employees. Hence, they’re part of the conversation and have a deeper understanding of what drives profitability and causes leaks. His company is employee-owned and highly entrepreneurial – the team also has a stake in the company and a desire to see the company succeed.
Stack paired this future-forward management style with another future-forward design: recession planning.
Doing this has allowed the company to diversify, shift strategies, buy assets, and transform during times in a market cycle where others are typically scrambling to stay afloat, laying off employees, and panicking.
As a company, they keep cash reserves on hand specifically for recessions and the crazy opportunities they bring in, like acquisitions, assets, and diversification.
Recessions are Times of Opportunity
Most people don’t see recessions as opportunities. Instead, they hunker down, brace themselves, and just focus on survival. The goal? Weather the storm and wait to recalibrate on the other side, hoping for minimal damage and losses.
But is that the best way to go about it, especially knowing that a recession will happen again, and again, about every ten years? This is a never-ending cycle of building, breaking down, and building again. Not fun.
So, why act surprised every time? We know the storm is coming. Why not prepare?
Recessions are an incredible time to make big moves for yourself and your business by seeing it as a time of opportunity, not calamity. While others are panic-selling, you could be scooping up assets, leases, and even other companies at a fraction of the cost.
You could shift strategies, transform your business, and find ways to support your customers even better than you could have before.
To do this, first change your mindset around what a recession is and what it means for your business. What if it serves as a big reset button, in a good way? What if it provides a new opportunity to assess your business, hybridize it, create even more value, and grow?
Instead of seeing recessions as times of contraction, try seeing how you can expand or reposition your offer, your value, and your service. This may seem counterintuitive if you’re struggling, but many solutions don’t actually require more capital or resources, just a shift in mindset. To get the ball rolling, ask yourself these three questions:
- What value do I create for my customers?
- How can I make it easier for my customers to access that value?
- What opportunities do I have now that I didn’t have before?
During the pandemic, some entrepreneurs jumped on buying restaurants, office space, and retail space, either for business use or to re-purpose into something else. Live-work areas have become more popular, and hobbies have boomed, opening up new opportunities in a variety of industries directly and indirectly connected to hobbies (most of us were home!).
Entrepreneurs are also seeing opportunities in the event industry because the world is craving in-person connections more than ever. There have been some crazy deals for event venues and restaurant spaces, and some future-forward businesses are opening up additional storefronts for cheap while others have had to close their doors.
When you hunker down during a recession, you risk missing unique opportunities that can support your growth and adaptation. Instead, shift your mindset and see recessions as a time for creativity, opportunity and growth. That way, you’ll see and be prepared for the good things that cross your path.
A wonderful Wayne Dyer quote that illustrates this mentality shift is this: “When you change the way you look at things, the things you look at change.”
How can you change the way you look at recessions and shift your thinking in times of recession or crisis?
Create a Growth Fund
When outside of a recession, take Jack Stack’s advice and create a growth fund while business is doing well. That way, you’re prepared for the next recession with a pool of funds dedicated to the opportunities that will arise.
The opportunities will be there. This time, you’ll be ready.
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