Recession: A Catapult or an Excuse?
Business leaders can use this economic downturn to their advantage
IIt’s hard to pick up a paper or listen to the news on any given day without “learning” that we are in a deep recession.
We get it already—the unemployment rate is nearing double digits, companies are being forced to merge or face reorganization, and there is a general angst in the population.
One of my favorite mantras has been the comparison of what we are going through now with the malaise of the early 1970s.
But, even if this is an accurate comparison, is that all bad? While it is certainly true that the ’70s were pretty dark in terms of government intervention in business, high tax rates, and large fluctuations in the stock market, consider a few budding leaders who charted a different path in the decade.
A young Bill Gates started Microsoft, Fred Smith was putting his college thesis into motion with FedEx, and Larry Ellison formed a little software company he called Oracle.
While large firms struggled (sound familiar?), many entrepreneurial startups began to flourish.
Instead of being victims of the environment, they used it to their advantage.
As a CPA, entrepreneurs are the most interesting group of clients I advise. In my journeys with them over the past decade, I have gleaned some fundamental tactics on how they became successful, and why some of them failed.
As the economy continues to limp along, this could certainly be the time for you to consider starting out on your own adventure, but it is critical to build your business on a foundation of sound business concepts.
Focus on the business.
This sounds simple enough, but I have seen many new startups spend too much time focused only on the strategic, or the big payoff they see down the road.
Meanwhile, customer complaints are not resolved, cash flow is not managed, receivables are not collected, and new markets are not explored.
Instead of spending hour after hour tweaking your strategic plans, roll up your sleeves and focus on what it takes to make your business thrive—turning prospects into clients, giving exemplary service to those clients, and offering the best possible product or service line.
Having a long-term vision is critical, and it will carry you through those extra challenging days. But every day offers us a finite amount of time to accomplish what we set out to, so use the bulk of this time growing and retaining your customer base in the most efficient and profitable ways.
Be the best representative of your company.
When meeting with potential customers, investors, or business partners, know who you are.
Do not hand out two business cards—one for your current business and one for your startup (I say this only half jokingly).
People gain confidence in those who appear to have a singular focus on what they are doing. Your business purpose should be delivered clearly and effortlessly.
Provide success stories to emphasize how you are able to deliver the highest quality product or service.
Manage your debt.
It requires a fine balancing act to take on enough debt to effectively grow your business without collapsing it from the weight.
Success in business can be foiled by the idea that debt is anathema to growth during tough times, but if you take on too much debt, you may find it difficult to service the payments as business ebbs and flows.
Increasing your business debt should be done in well-thought-out moves designed specifically for growth, and to take advantage of truly unique opportunities that will increase the firm’s value.
Complete monthly financials in a timely manner.
Of course, as an accountant, I have an extra sensitivity to this point. Proper cash flow management is one of the biggest challenges faced by startup enterprises.
You need to be keenly in tune with where the money is coming from and where it ends up. Don’t be afraid to question every line.
Many small businesses have failed over the past year because they could not react quickly enough with the information they had at hand.
If you don’t like accounting, hire an experienced accountant to perform some of the tasks and train you on how to efficiently maintain and understand your financial statements.
People tend to travel in herds and buy into conventional wisdom. By definition, leaders make bold but calculated moves to chart the path less traveled.
Starting a business as others are battening down the hatches certainly requires fortitude.
This type of spirit might also just launch the next Microsoft, FedEx, or Oracle. 
Jenika Cook
is a certified public accountant and Director of Tax and Accounting for MAriner Holdings in Leawood.
P | 913.647.9758
E | Jenika.cook@mariner-holdings.com