The yield curve inversion continuing to re-invert and the threat of broad tariffs are mounting an increasing amount of uncertainty for companies across virtually every industry.
During a similarly uncertain time at Capital One in 2015, we were so prepared for a potential recession that we had a strong confidence a recession would make us better off in the long run, by capturing a larger market share from competitors that were clearly over-leveraged.
Here are three essential goals that leaders of growing companies should focus on to turn this uncertainty into an opportunity:
โ๏ธ Optimize operations to bolster up margins
๐ฒ Prioritize the P&L for financial health
๐ Define a strategic growth plan
Lets break this downโ
โ๏ธ
โ๐ธ๐๐๐๐๐๐๐๐๐ฆ ๐๐ ๐๐๐๐๐ ๐กโ๐๐๐๐ ๐๐๐โ๐ก; ๐๐๐๐๐๐ก๐๐ฃ๐๐๐๐ ๐ ๐๐ ๐๐๐๐๐ ๐กโ๐ ๐๐๐โ๐ก ๐กโ๐๐๐๐ โ
This should always be a top priority for any organization. With smooth operations that produce strong margins, a company gets traction fast, and stands out as a winner when the money stops flowing in the economy.
๐ฆ๐ ๐๐ฅ๐ง ๐ด๐ผ๐ฎ๐น๐:
1๏ธโฃ Read Traction by Gino Wickman
2๏ธโฃ Build a scorecard and select KPIs that are strongly tied to the P&L
3๏ธโฃ Set goals for each KPI and keep responsible teams accountable for them
4๏ธโฃ Each week, dig into the root cause of key performance and take away one action item for the following week to slowly iterate towards operational excellence
๐ฒ
โ๐ถ๐๐ โ ๐๐ ๐๐๐๐โ
This is especially true when thereโs less cash flowing through local economies. Also, a recession tends to be followed with lower interest rates and stricter lending policies, so now would be a good time to pay down debt and improve credit worthiness.
๐ฆ๐ ๐๐ฅ๐ง ๐ด๐ผ๐ฎ๐น๐:
1๏ธโฃ Optimize operations as a pre-requisite
2๏ธโฃ Build a cash reserve of 6-12 months of operating expenses
3๏ธโฃ Identify loans with the highest interest rates and increase payments
4๏ธโฃ Create a cash flow forecasting plan and stress test it against best case and worst case scenarios
3. โAdversity is the chisel that carves out excellenceโ.
With the first two goals in place, growth companies would be in a good position to expand. In a best case scenario, there is a strong financial position to invest in new product lines or double down on marketing. In a worst case scenario, there is a strong financial position to acquire struggling competitors or capture their market.
๐ฆ๐ ๐๐ฅ๐ง ๐ด๐ผ๐ฎ๐น๐:
1๏ธโฃ Have the leadership team formulate a strategic growth plan under best and worst case scenarios
2๏ธโฃ Identify a few leading indicators of how a slow down affects your industry. Automate measurement of these indicators with proactive alerts so you can respond quickly.
You may have noticed these goals werenโt just about survival. They are about taking advantage of an opportunity.
Whether a business leader or employee, which of these three goals would you want your company to tackle first?
