How to Manage a Business During a Recession

Managing during a recession can be complicated.

According to consulting firm Accenture, managing through difficult economic times is a critical skill. Certainly, navigating a business through the murky waters of a recession can require careful planning, clear communication and flawless execution. If you follow a few simple guidelines, your business may not only survive but prosper during a recession.

Instructions

1. 

   Communicate coming change.

   Be clear about objectives. Hold meetings to outline team goals to weather the recession. Frank Pacetta, the maverick manager who nursed a Cleveland Xerox office to health in "Don't Fire Them, Fire Them Up," writes that his team meetings focused on letting employees know about changes, setting expectations, reinforcing the importance of work ethic and customers, and his promise to be "tough but fair."
   He distributed written details of employee expectations, benefits of achievement and direct consequences if expectations weren't met.

2. 

   Review Budget

   Review the profit and loss statement and focus on the expense summary. Anthony Urbaites, president of Louisville, Kentucky-based Aurum Consulting Group, recommends itemizing recent expenses, sorted in order of highest expense. "You'd be surprised how much you are spending in some categories," he says. "Ferret these out and analyze why costs are so high and find solutions for cutting them without negatively impacting operations." Three recommended areas to highlight are trade shows, utilities (including phone packages) and business travel.

3. 

   Examine the work flow process.

   Unclog bottlenecks. In "The Goal," Eliyahu Goldratt diagrams work flow to improve productivity. To do this, draw on paper a work flow chain diagram of your operation to pinpoint where business processes slow, then move resources from those areas the business is moving too quickly to these clogged positions. Diagramming work flow creates better efficiency and can drive more product to the customer without increasing expenses.

4. 

   Successful firms collaborate.

   Collaborate with customers. In "All Business is Show Business," Scott McKain advocates asking customers to outline their vision of the "Ultimate Customer Experience" with your company. Armed with this information, work to create processes that align with this vision. An Accenture study showed that companies that most successfully weathered the recession of 2000 to 2002 collaborated with customers effectively and created products or services to fill voids more efficiently to gain market share from weaker competitors.

5. 

   Show optimism.

   Stay optimistic. Author D.A. Benton studied 2,000 top executives and found that great leaders don't waver in their optimism about the future, especially during times of change. By remaining positive, you'll help employees focus on the task at hand---keeping the ship moving through the recessionary storm.

Tips & Warnings

• Any manager focusing on adjusting employee benefits or compensation should confer with human resource professionals to ensure all legal steps are followed before making changes.

References

• "Don't Fire Them, Fire Them Up"; Frank Pacetta; 1995.
• "All Business Is Show Business"'; Scott McKain; 2002.
• "The Goal: A Process Of Ongoing Improvement"; Eliyahu M. Goldratt; 2004.
• Accenture: What Did the Winners of the Last Recession Do Right
• "Lions Don't Need To Roar"; D.A.Benton; 1993.

Resources

• Area Development Online: Cutting Your Company's Business Costs
• "Execution: The Discipline Of Getting Things Done"; Larry Bossidy & Ram Charan; 2002.