written by Xan Pearson, CEO & President, Colorado Thought Leaders Forum
Many business owners are expressing concerns and trepidation about the uncertainties surrounding a potential recession and the impact it will have on their business. CTLF recently hosted a recession seminar for members, where speaker, Zack Gibson, Head of Investment Banking with Class VI Partners, provided great insights on what to expect and how to mitigate the impact of an economic downturn. Keep reading below for valuable takeaways from the seminar.
The average recession lasts 11 months. Successful companies take the opportunity to evaluate, assess, innovate, and improve their businesses when times are difficult. While a small percentage of companies may not survive a recession, companies that sustain or even improve their long-term success during and post-recession have similar qualities—they focus on driving value and reducing risk. To accomplish that, Zack provides a list of questions companies should be asking themselves right now to mitigate risk and drive value:
- How can we expand our market?
- Is there an untapped niche we can fill?
- Are we vulnerable by having any single key employee dependency (in some cases, it may be the business owner)?
- How can we develop a deeper and more experienced team?
- Do we have any concentrations to address that are adding risk to the business (product concentrations, vendor concentrations, customer concentrations)?
- Are there areas we are investing in and not generating the return we expect? Do we have legacy costs we can shed?
- Can we provide a higher margin product or increase price?
- Can we diversify vendors or suppliers?
- Do we have long-term contracts in place with vendors or client accounts?
- Do we have organizational systems in place to facilitate growth and improve our business (technology, staffing, etc.)?
Zack suggests doing a “What If? exercise.” Have your employees create a list of “What If?” questions including good and bad scenarios: What if we lost our biggest client? What if we grow too fast? Etc. Follow-up with brainstorm solutions and put systems in place to address or mitigate the repercussions of those potential scenarios.
For resources and more information, check out Zack’s presentation.