8 Crucial Business Skills to Weather the Recession Storm

The current decade has been turbulent at best, challenging business paradigms, industrial practices, and biological presumptions across the planet. It begs the question: What is the successful route to developing resilient business skills for the years to come?

From a global pandemic ranking near the Spanish Flu of 1918-1920 to worldwide lockdowns suffocating the travel and hospitality industries, through an overnight transition to remote work, a massive bump of cryptocurrencies, a housing market growing like crazy from Hong Kong to San Francisco to a global crash in 2022, businesses definitely had to endure a lot.

Back to The Global Recession

I vividly remember the Global Recession of 2008, using the opportunity to start my own venture and grow my first agency DevriX and my first co-founded startup VamTam. While the real estate market collapsed – and that reflected mortgage rates and a number of other industries—it wasn’t as wild compared to a biological plague lurking on the streets, massive lockdowns, or the virtual Great Resignation wave of early 2021.

Even the titans of the tech world faced severe challenges:

  • Meta laying off 13% of its workforce for the first time ever (after losing 70% of its valuation)
  • Twitter slashing over half of its workforce after being acquired by Elon Musk
  • Microsoft and Amazon following suit
  • More massive layoffs across big tech as a whole
Source: https://layoffs.fyi/

This decade has shaken the world and challenged business skills and management practices—and leadership expectations.

I’ve extracted 8 universal business skills and traits of great and resilient leaders in my broader network who successfully push through good and bad over the past years.

1. Financial Forecasting

Uncertainty leads to insecurity in handling business transactions. This entails lines of credit due to shifts in interest rates, clients pulling back while the dust settles, or the inability to handle payroll effectively (or in some cases, the need for layoffs).

Great financial forecasting is a crucial business skill that can prevent most factors from contributing to the turbulent corporate environment. 

Unless your business is dependent on VC money, pressed by a board to overperform on unprofitable metrics (think a mere headcount or revenue while losing money), then you’re in control of weathering the storm if it comes to that.

Working out your financial projection for the next 2 quarters or a financial year would include the assessment of contextual situations you may need to deal with and questions such as:

  • What are our current profit margins we can confidently sustain over the next 6 months?
  • What are the most likely risks for the business?
  • Worst-case scenario, how would this impact our cash flow (upon losing business, contracts, and clients that are likely to leave)?
  • What would be the accrued loss in the event of losing business?
  • How long could the business sustain while amassing that net loss monthly?
  • How much cash on hand is there available in the bank? 
  • Are there lines of credit that could be leveraged (and are terms still valid considering the recession)?
  • Is there debt to be considered (and what are the current interest rates in play)?

Uncomfortable questions are inevitable, but reviewing projections and runways in different scenarios helps put things into perspective.

This facilitates additional projections—or what expenses could be cut before laying staff members off. This may include licenses, ad spending, paid jobs, outsourced spend, premium listings, office perks, or other extra items that could be limited for the time being.

2. Risk Management

Risk management goes hand-in-hand with financial projections. 

Building multiple projections realistically is contingent on projecting possible caveats in your business strategy.

Mitigating risks can be handled on multiple fronts:

  • Contracts – shorter NET payments for vendors, longer tenure times for contractors
  • Agencies and freelancers to backfill for possible staff turnover or unexpected sick leaves
  • Multiple pipelines of revenue to double down on in case of losing business opportunities
  • Rainy days buffer in the bank
  • Limiting legal liability through insurance (preventing an unexpecting legal hit)

Risk management is a 24/7 job. The more proactive operational and administrative work comes in, the better.

Preventing “the bus factor” is the key element for mitigating risk. 

However, in times of recession, some potential risks have turned into reality. And it’s time to go through the same exercise and identify the next possible layers of risk.

3. Optimizing Resources

The year 2022 has clearly outlined hundreds of popular brands reliant on the paradigm of “go big or go home”.

The crypto ecosystem tanked hard, with layoffs coming out immediately after Bitcoin dropped. Several exchanges filed for bankruptcy within a month or two.

Source: PwC and pointillist.com

Two years ago, tens of thousands of companies engaged in layoffs weeks after the first lockdown. That clearly projects major flaws in both risk management and financial projections and demonstrates how the workforce is the first to get a strike in the event of financial uncertainty.

The smartest leaders in my network have built a scalable model that supports slowing down. 

Companies can last several months without any casualties. Entrepreneurs employing critical business skills to succeed can make this possible.

Growth initiatives are diversified and tap into external sources reducing several agency contracts without affecting staff, or scaling agency resources that yield the best results.

Hiring is ROI-based, not “headcount”. Performant employees are not surrounded by dozens of low performers, slowing projects down and leading to unprofitable propositions.

Bottom line, learning how to optimize and refine resources, substitute expensive licenses with open source initiatives, take down teams that don’t contribute, and maintain stable profit margins included in your arsenal of business skills will have a lesser impact on your core team.

4. Pivoting

COVID led to a massive shift in existing paradigms back in early 2020. 

  • Healthcare has become a priority for virtually everyone. People had to learn how to accommodate wearing masks, sanitation, and operating under different requirements.
  • Brick and mortars had to prioritize delivery services or other forms of distance-free transition of goods. Restaurants built open plants whenever possible, bringing tables and chairs outdoors with additional heating or fans to adhere to new laws and keep safety intact.
  • Office businesses shifted remote (mostly). Traditional organizations had to learn how to deal with that overnight.
  • Schooling transitioned to Google Meet, Zoom, or Microsoft Teams. Parents and kids had to adapt to this model over the course of weeks if not days.

Zoom’s revenue grew from $328M in Q1 2020 to $664M in Q2 2020 alone. It was one of the key stocks to own (along with big pharma working on vaccines). And food delivery/logistic companies! 

Understanding what lines of business come with the highest priority enables businesses to pivot, adapt, and partner up with said ecosystems. Additionally, not reading into the growth wave while it’s hot is a reality check for future financial planning.

5. Leadership

Great leaders are more likely to sustain a tough economic situation. It’s impossible to guarantee full resilience but most true leaders out there focus on leadership-derived business skills and are:

  • Consistent and determined, which supports trust from the market, staff, and clients
  • Open and transparent, building stronger connections between management and the rest of the organization
  • Great strategists, carving new opportunities and contributing to causes that people support

Leadership as a business skill entails management, communication, financial planning, recruitment, sales, and marketing channels (to name a few). No single leader can ace all possible areas.

But the ability to build great teams, support a sustainable financial plan, retain talent, and keep clients aboard, is a strong indicator for future chances.

6. Business Strategy

No magic bullet exists in terms of a great business strategy.

Small, starting businesses, have to pivot, be nimble, start small, grow vertically, and slowly diversify. That’s one framework for success.

Fortune 500s are easier to learn from but hard to replicate at a small scale.

Understanding when to pull given layers, when to diversify without losing focus, and how to grow in a single channel without fully depending on one source of revenue, is a business bet jeopardizing most small businesses.

Diversification is inevitably one of the key areas of success. Different lines of business, different audiences, different price points, different services. 

In the realm of investing, most successful investors operate blended portfolios—indexes and ETFs, individual stocks, real estate, probably crypto, contemporary art, gold, bonds, you name it. After a certain threshold, preserving capital is more important than growth, and the most dangerous risk for a business is tanking severely overnight.

Polishing your business strategy skills, staying sharp, learning from the competition, and tracking macroeconomic trends helps a ton.

7. Market Research

Speaking of macroeconomic trends, market research is another key business skill for great business leaders.

10-year S&P 500 vs CPI – via 5yearcharts.com

It breaks down into different segments (or rather, it’s a transferable skill). Some examples:

  • Competitive research – how your direct competitors are doing, what channels work for them, how they hire, what is the average size of a successful business, how about the largest companies in the market, and what differentiates them
  • Market definition – what is the total addressable market, the largest 5 players in the space, the breakdown of key categories, portfolio of services, sales and revenue channels, advertising campaigns, allotment of budgets? Some podcasts and media interviews could serve as sources of inspiration and insights.
  • Local geopolitical research – how the local ecosystem reacts to political or economical changes? Interest rate updates, upcoming elections, change of leadership, stimulus checks vs. major decisions such as lockdowns. Local market in different segments, along with other companies in the space (not necessarily this niche).
  • Macroeconomic/international research – are impacting factors only valid in your city/state/country or globally? Are there other contributing factors (like the war in Ukraine) that have a global impact on energy prices, deliveries, and transporting goods or services? Are there any shifts in the US-China relationship in terms of the transportation of chips or factories operating on foreign grounds? 

It’s impossible to wrap one’s hand around everything and anything at a given time, but keeping the pulse on the economy, the competitive scape, and world news could be a leading indicator and a preventive mechanism that supports the definition of a solid business strategy.

Understanding common factors (like the Great Resignation) or comparing local impact helps calibrate and act depending on what’s unique to the business vs. commonalities in the space.

8. Communication

Communicating challenges, changes in company policies, losing talent or clients, and shifts in strategy—both internally and externally—is integral to the success of a business which is why being effective in communicating is one business skill you surely want to have.

Red tape can only do so much. I’m a great proponent of transparency—as much and as best as possible —since my personal philosophy is supportive of determined and motivated individuals eager to grow and support their team or department as much as it does the same for them.

Organizations wouldn’t exist alone. Team effort is what makes an impact. 

Communicating that effectively can alleviate stress internally, especially when discussing the elephant in the room.

Identifying and confirming strategy to the outer world—investors and clients—helps ensure stability and resilience in the business.

A proven track record of successful decisions makes a business more stable for times to come.

Bonus: Critical Thinking

And one added trait among many business skills I’m personally fond of is critical thinking

Most of our strategy is contingent on gathering historical data or sticking to influential decisions by leaders.

Over the past few years, industry experts I followed and gathered insights from made 180 turns on multiple occasions.

  • Ray Dalio, one of the most brilliant investors (and the largest hedge fund owner) boasted “Cash is thrash” for a prolonged period of time. Until it no longer was. Due to the economic shift, a deteriorating market, and no viable opportunity to save money, inflation became a lesser evil than other sources.
  • Financial advisors online promoted FTX as a crypto exchange. Even Kevin O’Leary promoted it publicly – until it filed for bankruptcy and became an international scandal. 
  • Health advisors molded their opinion on the pandemic, the dangers of the SARS-CoV-2 virus, its impact, the need for lockdowns vs. global immunity, and navigating the pros and cons in different environments. Subjectivity and guesswork came into play at best, as seen by political leaders of the world’s most powerful economies.  

Being overly trusting without questioning can be risky, particularly when there’s much uncertainty globally—like economic downturns, social unrest, or even health crises. In such times, simply going with the flow or taking things at face value can lead to bad decisions or missed opportunities.

That’s why continuous learning is so important. When you make a habit of learning, you’re equipping yourself with a mental toolbox.

This toolbox can include knowledge from books, insights from experiences, or lessons from mistakes. The larger and more varied your toolbox, the better you can analyze situations, spot risks and opportunities, and develop creative solutions.

The more you learn about finance, marketing, and even psychology, the better you’ll understand how to navigate challenges like a sudden market change or a new competitor.

You’ll have a variety of strategies to fall back on rather than just winging it and hoping for the best.

In addition to helping you solve problems and seize opportunities, this ongoing learning also allows you to develop new ways of thinking. You might discover you’re really good at something you’d never tried before or develop a new passion that opens up new career paths.

Whatever path you take, keep a closer eye on the key business leadership traits for the coming year. Recessions come and go, but successful businesses make it through with the right business skills.

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