Proactive moves are required to weather recession

Will the recession help or hurt your business? Will it be stronger or weaker after turbulent recessionary seas finally calm?

Robert Finfrock, owner of a commercial construction company in Orlando, Fla., tracks recessionary pressures well in advance. Without proactive moves, an economic slowdown turns his highly capital intensive business into a sea of red ink.

"As soon as we see indicators of a potential recession, we immediately start to overbook relative to capacity as we know some projects will be canceled or delayed. This helps us prevent losses."

Recessions understandably

raise fear, especially if you didn't see a downturn coming. It's natural to buckle down the spending hatches, drop proactive spending sails and wait out the storm. But doing so will only create more challenging post-recession competition.

Number of options

Effective leaders have a number of options for using recessions to advance future competitiveness.

One option is illustrated by a moveable-partitions business that reduced design, ordering and invoicing time by weeks, enabling it to gain market share and keep what might have been redundant employees on board. How, for example, can you increase R&D return by streamlining processes?

A second option, strategically focused external restructuring, was chosen by a truck mirror manufacturer that decided to sell directly to fleets, versus selling through distributors and truck manufacturers.

By restructuring its selling chain, market share and profits rose. Costs fell and businesses with trucking fleets got safer visual solutions, faster, at lower prices.

Unproductive spending

A third option is to eliminate any unproductive spending added during prosperous years. What trade shows and selling pieces have low payback? What customers and markets would show negative operating profits if costs were fully allocated?

Using cost savings to fund investments in areas in which your competition will likely make cuts presents a fourth option to building your competitiveness during a recession.

Companies that increase advertising, skill building and innovation during recessions are cruise ship lengths ahead of their competition post-recession.

Aid your teams

Do your leaders need mentors to further develop? A fifth option is to focus on improving your sales and marketing management.

Great sales and marketing managers see revenue-targets as a challenge. They find ways to help sales reps make their targets, rather than rationalize why targets are impossible.

Make sure sales and marketing are focused on the same target markets and growth opportunities.

Consider new financing

In a capital-crunch recession, as this one is, a sixth option is to become proactive with existing funding sources to secure needed capital.

Think creatively about new sources as well. Companies willing to finance customer purchases will have competitive advantage throughout this recession.

The seventh option is to dismiss co-workers not pulling their weight. Decent severance packages and outplacement counseling, coupled with a performance management system that alerts co-workers to performance shortfalls, mitigates dismissed employees feeling thrown overboard.

Buddhist monk Michael Roach turned a small, failing business into a $100 million success.

His book, "The Diamond Cutter," offers an eighth option: being generous with others to attract abundant opportunities to your own company.

Your local community's needs only increase in recessionary times. Whether you use personal wealth or business wealth, make a needed difference.

What are your plans for not just weathering the forthcoming storm, but sailing closer to your company's long-term goals?

Kay Plantes is a Madison economist, strategy consultant and executive educator.