601: 4 ways to prepare for a recession

A few months back I was driving the most beautiful stretch of interstate on God’s green earth, I-26 between Orangeburg and Columbia…and I’m on one of those long stretches where it’s 40-ft tall pine trees as far as the eye can see and I start to notice some clouds stacking up in the distance. Cars just disappearing into it a mile or so out and here I am driving 70+ mph right at it. Kind of an eerie gray about it and I can’t even remotely see through it, what’s on the other side, what’s inside… none of it! And the closer I got the more questions popped into my head. And it was fine, it was a bad storm that we had to slow down for, but we made it through to the sunshine on the other side. And as I think about the state of business right now, that’s the collective feeling we get. We can see a long way out. A lot of us are booked months, maybe a year or more into the future. And yet there’s this big cloud out there and this buzz word we keep hearing, “RECESSION”. That for some reason no one can really identify what it’s going to look like once we arrive at this thing. How bad is it going to be? Will we be able to drive our business through it normally? Are we going to have to slow down? Should we be nervous or just push through as quickly as possible to the other side? Here’s what we do know…none of us know how bad it will be. We do know there are some changes and we’re going to have to deal with those changes in our exhausted state of just getting through the past 2+ years of a post covid reality. We also know that we can prepare for whatever that storm looks like. We can get our business ready so we can do more than just white knuckle it all the way through. 4 questions you need to answer today to prepare for whatever is around the corner… 1. “What are the rhythms to equip our team with so that they are free to run full speed towards the vision?” I coached high school lacrosse at Hilton Head High for 6 years. Every year we would have a parent meeting and outline the full year of what we needed to do to ultimately win a state championship. -Fall weightlifting and conditioning…here’s the times and places. Commit to it. -Tutoring Tuesdays/Thursdays after school so your grades are in line If we can plan a year of high school lacrosse with that kind of intentionality, why can’t we do the same with our business? What rhythms do we need to equip our team with so they are free to run full speed towards the vision? 2. “Knowing our Mission…What would we do in response to our primary lead source drying up?” We’ve been talking about this cloud that’s out there, right? This storm that may be short, long, intense, not so bad…who knows? How do we pivot in the midst of that. And what would happen if your primary lead source, your primary faucet of business shut off or rapidly slowed down? I’m not saying it will, but how do we diversify your business and allow for change in the future? 3. “What would need to happen if something happened to me?” This is something we spend a ton of time on. Hopefully, nothing ever does…but the business needs to be ready! What processes do you need to record? What systems need to be built? What happens if someone gets promoted within and you need to train their replacement? This stuff happens all the time and businesses are set back because they aren’t ready. Things aren’t written down. So ask everyone in your business that question and let the answer push you to get things written down. 4. “How does my role directly affect the financial health of the business?” This one is huge. Have a simple conversation with your team around what makes you profitable. Helping them understand that they play a key role in profitability. Show them what happens when a dollar enters the business and what is left over at the end. (Insider information…you don’t make 100% profit, but that’s what they think!) Show them your COGS and your insurance expenses and payroll taxes. It’s helpful for them to see it all written out. Listen, we don't know what is around the bend, but we do know we can prepare in these 4 key areas. With our people, with our Purpose, with our Process and with our Profit. Once you touch on all 4 of those, you will be well on your way to being prepared for whatever this recession looks like! Have a great day.