Signs are that the economy is on a slow path to recovery. Just as spring always follows winter, it will recover. The key question smart businesses are asking now is not only how to survive today, but how to position themselves to get ahead when those good times arrive.
Past recessions have shown that not every business will survive, and for many, sales and profitability won’t return to pre-recession levels. However, some businesses flourish post-recession, achieving better sales and profitability than before and significantly outperforming their industry rivals. This demonstrates that merely waiting for good times to return isn’t enough. To recover and thrive post-recession, businesses need to make smart decisions and strategic choices and execute now.
Businesses typically adopt one of two broad strategies when faced with environmental changes and threats:
Defensive: Protecting current assets, minimising losses, and cutting costs to survive the present.
Offensive: Aiming for future growth by investing in assets, developing new products, attracting new customers, and enhancing marketing efforts.
Currently, much of the prevailing advice leans toward defensive strategies, encouraging businesses to ride out the slow period and “hold on until 2025.” However, this approach may not yield the expected results for many companies. Research shows that businesses adopting an overly defensive, siege mentality—drastically cutting costs and staff, and focusing solely on loss minimisation and survival—tend not to fare well post-recession.
The businesses most likely to perform well and outperform competitors after a recession follow a pragmatic, balanced strategy. While cost-cutting is necessary to survive today, investment is equally essential to ensure sales return and spur growth tomorrow. Managing both aspects simultaneously is crucial to emerging as a post-recession winner.
A winning strategy involves selective defensive moves focused on improving operational efficiency rather than simply slashing costs; greater productivity, a lower cost base, and higher service quality today provides even greater benefits in the recovery. Offensive moves need to be well-considered, aligned, and integrated with business objectives. This includes maintaining the core business and exploring new opportunities by investing in assets, new markets, customer groups, and marketing.