3 Tools For Recovering From Economic Shocks

The COVID-19 pandemic has been more than a health crisis. With businesses around the world coping with lockdowns, consumers losing income, and employees concerned about getting sick, it has become an enormous economic crisis, too.

Businesses that survived the Great Recession might feel like they’re reliving the past, and newer businesses might be scrambling to learn how to survive in these conditions. The harsh truth is that those who don’t have a plan in place will have a harder time recovering from economic shocks, including this one. Here are some tools that can help businesses on the path to recovery.

1) Avoid Layoffs if Possible

During a recession, businesses have to cut costs, and unfortunately layoffs are part of that. But they shouldn’t be the go-to strategy. Your trained workforce is your most valuable asset, and you’re going to need them with you to make your comeback. Find other ways to cut costs, and make layoffs the last resort. Some solutions could include temporarily cutting back on hours or incentives, or even furloughs instead of layoffs.

2) Be Judicious with Spending

Don’t take unnecessary chances with money during this time. Look at current and future spending and create new plans based on the realities of the economy. If purchases must be made, take a long-term view. How much will the purchase cost over its lifetime, not just upfront?

Keep in mind, that the best way to survive a crisis and hit the ground running is to already have a buffer of funding to see you through. Make sure your business has robust reserves, and keep debt low. That way, you can use a downturn or slow time to make strategic changes or improvements to your business instead of struggling just to keep the lights on.

3) Plan, Don’t React

Difficult times bring with them fear, doubt and even panic. These are not good emotions to bring to the table when making tough business decisions. Keep a long-term view, and plan for how to profit from new opportunities in the post-pandemic markets.

Take the lessons you learn during this time, and, before the next downturn, craft a crisis plan in advance because you make better decisions with a cool head than in the midst of a crisis. No matter how much we wish for the contrary, trouble will strike several times during the life of a business. Business leaders should confront this truth long in advance of a crisis and create a solid, written plan of action.

The COVID-19 pandemic will eventually pass, and when it does, businesses who worked smart during this time will be the ones who survive and even expand in the new normal. When that happens, be sure to look back at any lessons learned and incorporate them into your crisis plan. You’ll be better equipped to thrive in the wake of the next crisis.