There are those who say you should never look back, only forward. I disagree. Looking back can be very valuable when you are learning from the past. The question every business owner and manager should be asking is “What have I learned about running my business during this recession?”
A good analysis will enable you to perform better in the future. So how do you analyze the situation? Here are a few questions that will help you.
Did I anticipate a recession and when it could start? You may wonder how you can anticipate a recession. Once again, look back. A quick review of previous recessions will show that our economy goes through cycles. When we are in a growth cycle, consumers and businesses tend to think that the growth will last forever. They tend to over-borrow, over-spend, etc. This causes some kind of artificial boom, such as the dot-com boom or the housing boom. When everyone realizes that the boom item (such as housing prices and the mortgage supply) is inflated, then spending, borrowing and everything else stops and into a recession we go. If you look at the years that past recessions started, you can get a good idea of the length of each growth/boom period. You may not know exactly when that is going to occur, but you will have a general feel for the potential start and be better prepared.
Did I respond quickly to the recession? Did you continue on your merry way even though you knew the economy was slowing down? Did you find yourself reacting when it was too late? I can’t predict the future but I can guarantee you this will not be the last recession our economy will experience. Therefore, you should have a “recession plan.” Based on what worked and what did not work for you during this recession, develop a plan so you will be ready for the next one.
Did I only make short-term decisions? Sometimes during a recession, we make decisions to cut costs that save us money now, but hurt us for the future. Did you lay-off your best employees? Did you cut your marketing too much? Did you cut ties with valuable suppliers who may not give you favorable terms in the future? Take a hard, realistic look at the decisions you made and determine what you should have done differently. Make that part of your recession plan for the future.
I think we all agree that we should learn from our mistakes. The difficulty that some people have is admitting that we have made mistakes.
Be honest with yourself. Analyze the past carefully and thoroughly. Develop a plan and be ready. Another recession will come.
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