What does it take to be a leader during a recession?
I bought a business called MyCorporation, which provides online filing services for small business owners, out of Intuit in 2009. This purchase was made during The Great Recession. I was already taking a risk in my career making the leap from a corporate position to entrepreneurship. Now, the risk of becoming a business owner was made even greater thanks to the unstable economic climate. It could have been total chaos if I let the “what if?” scenarios cooking inside of my mind manifest into reality.
Instead, I focused on ways I could make my business recession-proof. Our company specializes in providing corporation and LLC formation services. This is an offering that, even during a recession, I felt confident would still be in high demand because entrepreneurs still need to structure their businesses when starting up. They also have to check various legal items off their to-do list — things like trademark registration and filing for business licenses — which were offerings we provided as well. As I focused on ways we could provide these offerings and create great customer experiences, I was also able to partner with other like-minded businesses. They could provide our customers with services we didn’t offer, and we could do the same in return to establish a mutual partnership lasting well beyond the recession.
Since then, we’ve grown no matter what the economy type thanks to focusing on our strengths. I’ve also discovered another type of growth that goes beyond business: I’ve grown as a leader. Leading through a recession shows you what you’re made of, but I won’t say it’s easy because it’s not. In order to thrive, and survive, during a recession you should be able to accomplish the following aspects of leadership.
[Related: 3 leadership qualities entrepreneurs should strive for in 2019]
- Treat change as an ally
- Maintain confidence with your team
- Get (if you aren’t already) financially prepared
- Increase your own visibility, along with that of the business
- Celebrate the small victories
1. Treat change as an ally.
Few people actively practice this kind of behavior. It’s understandable. Change is scary, especially for a business. When sales decline or the markets stagnant, it rocks our sense of stability. We like it when change is good, like a marketing initiative that pays off. We don’t like it when it threatens to impact our way of life or day-to-day routine.
However, change is also the reality of life. As the co-founder of Root Inc., Jim Haudan has spent more than 20 years helping organizations to unleash their hidden potential to produce winning results. In the event of a recession, Haudan says the first thing people have to do is face the facts about their new reality.
Then, it’s time to align with urgency. “Change is often looked at as a crisis,” Haudan says. “What leaders should do is encourage people to get on board with change.”
How do you do that? The best way is to be immediate with your actions. “It’s a leader’s job to immediately analyze and act on problems,” Haudan says.
Do not hide from change, as tends to be the popular coping means. Instead, use urgency to frame challenges. Leaders working through recessions must be able to regularly engage people in a deeper understanding of the issues at hand and explain to them the “whys” behind their actions.
2. Maintain team confidence.
Regular engagement with your team members doesn’t stop the office grapevine from growing. It’s not uncommon at all for employees to quietly speculate about what they believe you may not be telling them. This kind of gossip has the power to lower employee morale and cause hard-working team members to decline in productivity. After all, what’s the point of working hard when the world is collapsing?
As a leader, I believe there are two vital approaches to maintaining team confidence during a recession. The first is to encourage your team to get proactive. Ask for feedback and listen to what they have to say. If they have any ideas, any at all, that can help benefit the bottom line of the business, share them.
Take a moment to imagine that you came up with an out-of-the-box idea and shared it with the team. It didn’t feel like it might work inside your head, but once it got outside everyone listened and got on board. The idea was developed, tested, and launched. It worked! Your great idea, essentially, saved the day. How good would that make you feel? All you have to do is speak up, which has the potential to make great things happen for the business and everyone within it.
As for the second approach to maintain team confidence during recessions, I say thank you to my team members. I make it a point to tell them how much I appreciate their hard work and value everything they do on a daily basis. A little bit of encouragement goes a long way in helping your team believe their work is making a difference. While the economic climate may be uncertain in the moment, expressing gratitude for your team helps get everyone excited for the company’s future.
[Related: How Kindness in Business Pays Off for Leaders]
3. Revisit your financial plans.
You’ve spent a sufficient amount of time reassuring your team that you have a plan for dealing with a recession. Now, it’s time to walk the walk.
Go back to your business plan and take a look at its financial projections. Many of the areas outlined, including cash flow, were drafted when the business first got its start. As such, your financial plans may already predict where you’re at and need to go next. Keep a close eye on the market and your industry to better establish plans for when it’s time to stabilize and scale the business.
Look at the existing expenses your business has, and see where you can cut costs. Ideally this should be done on an annual basis for any business, not limited to a recession, as it aids to better budget certainty. It’s also beneficial for businesses to simplify, as some expenses may be more ROI negative than you realize upon review.
4. Increase your visibility.
Typically during a recession, entrepreneurs will spend a great deal of time focusing on ways they can get their business out in the public eye. They’ll spend money on social marketing campaigns and PR initiatives that increase their company’s visibility.
What many entrepreneurs don’t do, however, is increase their own visibility. As the leaders of their businesses, it’s equally important that their name gets just as much word of mouth. Take business cards with you to networking events, work your business booth at a trade show, and write articles to publish on major outlets (or niche organizations like The Story Exchange) that position you as a thought leader in your given industry. This helps build awareness and credibility for both you and your business.
5. Celebrate the small victories.
Recessions are tough. It’s a physical and mental kind of difficulty with no clear end date in sight. Don’t let it get you down. Now is the time to make the most of the little, wonderful things that happen with your business.
During a recession, Haudan says to celebrate small victories. This can be anything from getting a new sales lead to a positive Yelp review.
“Leaders must recognize and celebrate the adaptive actions that are getting positive results,” Haudan says. “Recognizing the small wins will help people persevere.”
Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at@MyCorporation.
[Related: This fintech entrepreneur is banking on disaster. Literally.]