Be Ready For Risks

Companies should have a long-term strategy in place for navigating recession.

- Morgen Witzel

Like death and taxation, economic recessions and downturns are inevitable. And—again, like death or tax bills—when they arrive it is too late to do anything about them. Companies that fail to prepare for a recession will inevitably suffer when the economy turns down. However, companies that exercise foresight and make reasonable preparations will usually find that they can outride the recession wave with less difficulty; and even, sometimes, take advantage of possibilities for growth. One company’s crisis is very often an opportunity for another to prosper.

Preparing for recession and downturn should be part of every company’s long-term strategy. Economic cycles have been around for centuries, from the South Sea Bubble to the 2008 financial crisis, and there is no reason to suppose that they will end any time soon. A combination of economic forces and human nature, veering from optimism to pessimism, and back again, means that economic tides will ebb and flow. So, one thing we know for certain is that there will be another recession, and another one after that, and so on; the only question is when? Leaders of businesses have a responsibility to prepare for these inevitabilities well in advance because, to repeat the point just made, once the recession arrives, it is too late. The only people who will prosper then are the lawyers and insolvency practitioners.

Have a strategy in place