Business coaching expert Darren Shirlaw looks at five common pitfalls for businesses during a recession.
If you want your business to grow quickly out of the recession, make sure you seize the opportunities available to take maximum advantage.
1. Timing
There are four stages to economic cycles.
- Down – as the market heads south into a bear market
- Drag – as the market bounces off the bottom but drags out in a flat period
- Release – the market spikes downward initially and then releases into a new period of growth
- Up – the market moves into the new bull market
The opportunity lies in spotting the stages quickly and investing accordingly.
2. Risk Profile
Most businesses reduce risk during a recession. But this can send them into a 'sell low, buy high' spiral and mean they are out of step with the timings outlined above. Successful businesses monitor their risk profile and adjust their tactics and take the 'buy low, sell high' strategy.
3. Wind or Unwind
Once the market starts to improve, many owners/managers will still have their foot on the brakes, operating their business in 'unwind' mode, reluctant to change without seeing plenty of evidence of being out of the recession. Businesses that delay 'winding up' again may miss the boat for initial growth through being too cautious.
4. Micro vs Macro Focus
During a recession many businesses become 'micro-focused' and concentrate on the small details. It's important not to lose sight of the bigger picture. Ensure 'micro' strategies are aligned to your growth or 'macro' strategies, or you could be playing catch-up once the market picks up.
5. Industry Cycles
Owners often get caught up in the 'doom and gloom' across the economy and fail to watch cycles within their own industry. Remember that not all industries move in sync with the economy overall.
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Shirlaws is an international business coaching organisation for owner-managed businesses. Shirlaws, in association with Smith & Williamson, is running 'Splash', a programme showing owners how to position themselves for the upturn. |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
