Lessons from a recession

fD eo rrMEs FoR rr,rosr enterprises

I-lequals good times for those catering to the stressed, the depressed, and the anxious. As measured by the marked increase in calls to mental health hotlines whenever the unemployment rate rises and more businesses begin closing their doors, recession packs an emotional and construction and auto dealers. This suggests that there is more going on than the inevitable response to economic contraction. was the year it mortgaged virtually all its U.S. assets in exchange for the billions of dollars it needed to reorganize and resize to reflect is smaller market share. spiritual punch, as well as an economic one.

What the recession tells us, whether we look at the human stories or the dry statistics, is that there are important lessons to be learned from slack periods in the business cycle. When these lessons have been applied during or even prior to this most recent recession, many of these businesses were able to survive and, in some cases, prosper while their lessprepared colleagues struggled to survive.

No better example exists than the side-by-side comparison of America's two largest automobile companies. Executives at Ford saw the recession coming and prepared for it. General Motors' leaders had access to the same data, but kept doing business pretty much as usual. As a result, Ford required neither bankruptcy protection nor a government bailout during 2009. GM needed both.

While every industry, market and business is unique, some of the lessons of how to prepare for and survive a recession are general and nearly universally applicable.

1. See it coming.

The move shocked most observers, but has proved one of the smartest by a major corporation in recent years. Ford avoided the bankruptcy that would have stripped the founder's descendants of their super-voting shares and kept it a family-controlled company. In 2009, the worst year for autos in memory, Ford reported an annual profit.

2. Xnotn how to respond.

Several years of recession have taken their toll. Many companies that were able to handle 12 months of declining sales found that 24 months of shrinking top-line revenues were simply too much. But, of course, not all companies have become insolvent, even those in the industries with the highest rates of bankruptcies, such as

I'm not talking about being able to forecast macroeconomic trends. That is an art practiced by many, but succeeded at by few. I am talking about being able to tell-by analyzing your own company's financial reportswhen demand is falling, debt is increasing, and margins are shrinking. Ford, for instance, saw the writing on the wall in 2006. Clearly, the company was going to have to accept a smaller share of the auto market. That

Managing through recession requires special skills. Many businesses are operated by owners who are, basically, technicians. They are former carpenters who have become builders and ex-truck drivers who have formed logistics companies. Few have the expertise do the financial analysis necessary to pinpoint where the problems lie and how to apply the techniques of business leadership to smooth performance and operations. The entrepreneurs who ride out recession after recession are generally those who understand that financials are not mere measurements of a company's strength and success. They are the equivalent of vital signs to a doctor. Failing to grasp the effect of any move on the patient's vital signs, to continue the metaphor, is the equivalent of malpractice.

3. Be decisive.

Understand that you have to make changes, including some that won't be fun or easy. When business is good, decisions tend to be easy: If someone threatens to leave. offer more money and a better-sounding title. If people complain about travel, send them first-class regardless of extra cost.

But companies led by people who are more willing to make hard decisions tend to run both leaner and, if necessary, meaner. Sometimes workforces have to be cut, offices closed, product lines trimmed, and even longtime associates let go. But necessary changes don't get easier if you wait and procrastinate. Failure to be decisive may mean that you aren't around to enjoy the next recovery.

4. Knon" when to call in help.

Few business leaders can really do it all. Even the most sophisticated and resource-laden organizations occasionally look outside for expert advice and assistance. For businesses in peril, the sooner the request is made, the better.

It can be painful to call in help late. When sales have already slumped and profits are disappearing, spending money on consultants or other experts may seem frivolous. But you should still spend it. And it's easier to spend it earlier in the process of surviving a downturn, as well as more likely to produce positive results.

Stress is always a traveling companion of challenging times. However, stress is not usually life threatening. It can be dealt with. By looking beyond today to the better times that follow, both ordinary people and business leaders can rise above the turmoil and find the energy and determination to keep going, act smart, and apply the lessons learned ln past recessrons. This downturn offered perhaps more valuable lessons than the usual slump in the business cycle. And, for that, perhaps we should be grateful.

- James OIan Hutcheson is managing partner and founder of ReGeneration

Partners, a family business consulting based in Dallas, Tx. For 20 years, he worked at Olan Mills, afirm started by his grandfather. Reach him at (800) 406-1 I 12 or www.re generation-partners.com.

Reprinted with permission of ReGeneration Partners. No portion of this article may be reproduced without its permission.

& Flooring

TRIM 6. LUMBER CO.

Brazilian Hardwood Specialists

Your direct source for Ipe, Tigerwood, Garapa, and Cumaru decking Many OpdoosTo Choose FromI l) Shipping from ow Bmzilian Milb direct to your job site or lumberyard i) Crcnn Mi ttinT;;;:rr:il'"I#toi'*'u.'*