Three Strategic Tips for Your Recession Survival Kit
by CSSP, Inc.

A recent BusinessWeek article by Jason Calacanis is entitled, "What to Do if Your Startup is Failing" (March 3, 2009). His description of life in the trenches -- the hard work, desperate measures and mental toughness required of anyone who has survived a near-death business experience -- is one from which any manager can take several valuable lessons. Whether or not these tough economic times have put you and your staff on the ropes, it is useful to examine Calacanis' entrepreneurial tips for dealing with the possibility that the next blow of bad news could be a knockout punch for your company. The current economic trial is a true measure of your management abilities, so hunker down, stay focused and…enjoy this rare opportunity to learn and grow!

The lessons learned by Calacanis are derived from his experience with a reversal of fortune more extreme than the one you may be encountering at this time: a single year reduction of full-time staff from 70 to 12 along with a ninety-five percent decline in revenue (from almost twelve million dollars to barely six hundred thousand!). His description of the sheer professional toughness, creative problem solving and resilience of spirit necessary to survive such a storm is instructive in the following way: either you embrace this challenge with a "bring it on" kind of attitude or it's time to file your resignation and update your resume.

You need a different sense of urgency under the current conditions. This is not news to anyone living through it right now, but the point is to avoid psychologically struggling with this altered reality. Accept it as the new normal and move on because it's likely to be with you for a while.

Presented with an apparent end-of-life scenario, Calacanis' first recommendation is to determine the length of your runway. He compares the management of an enterprise with a predictable hard stop on their dwindling capital to landing a plane -- and avoiding a cash crash before coming to a stop. The first thing to do is to think rationally and determine how long you can last before your resources run out -- establish the length of your runway. Then do everything possible to extend that deadline through severe cost cutting and short-term revenue boosting. By delaying the day of reckoning, you might give yourself enough time to develop solutions to your biggest challenges.

Whether or not your situation is this dire, it is useful to think in these terms. Understand that your business life has changed. Evaluate your business model in simple, strategic terms. Make clear, coherent, probably difficult decisions about what to do now to extend (and, of course, potentially improve) your present financial stability for as long as possible. Prepare contingency plans just in case things get much worse before they improve.

The fact that your hourly stress level is higher than it was two years ago is not a surprise. The key is to stay calm and deal with it knowing two things. First, businesses have been through these scenarios before and survived. Second, when you emerge successfully from this recession, your company will be stronger only if you and your management team behaved well during the crisis. In Calacanis' words: "People's reputations are made in the bad times more than the good ones". Your company's reputation in the marketplace and your own employees' view of their leadership team can be enhanced or damaged in the months ahead.

A client of mine has seen their automobile industry sales drop precipitously in the last four months. They have assumed that the extreme reduction in orders is due to system-wide inventory reductions. Expectations are that once the supply chain has been wrung out, orders will be back to a level significantly lower than the good old days, but at least adequate to avoid desperation due to lack of revenue. Of course, only time will tell just how deep the downturn will be, but it is encouraging to see that they are not abandoning sound strategic principles by taking their car off the road just because of an unusually large speed bump. In the meantime, they are busy preparing plans and exploring options for cost reductions and sales in other areas -- overall, a carefully and calmly conceived response to the current situation.

It is safe to say that a majority of businesses are suffering during this recession. You can lead your company through these times by adhering to these simple ideas:

  1. Attack the current business climate with the enthusiasm and determination of a true entrepreneur.
  2. Avoid emotional responses to the challenges ahead. Continue to make decisions based on the sound strategic underpinnings of your business model.
  3. Execute business decisions that will enhance your company's reputation in the marketplace and the character of your leadership team in the eyes of your employees.

You can reach the Center for Simplified Strategic Planning, Inc. via e-mail at

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© Copyright 2009 by Center for Simplified Strategic Planning, Inc. Ann Arbor, MI -- Reprint permission granted with full attribution.