If you’ve been in the workforce over the past 25 years, you know what a rollercoaster businesses have been on. From the dotcom bubble to the Great Recession to the pandemic pendulum, we’ve all experienced our share of ups and downs.
What’s especially interesting is how the goal line for success moves with the economy. For instance, in 2006, almost all companies were on an upward trajectory. If your revenue and earnings were flat compared to 2005, you were losing the battle for market share because your competitors were growing double digits. By 2008, though, companies with growth ranging from 0-10% down from 2007 represented those that were winning in a bear market.
Despite the pandemic shakiness and current concerns related to Russia’s war on Ukraine, we’ve had years of strong economic growth and business conditions. How do you know if you’ve built something that will last, or if you’re just riding tailwinds?
Now, with inflation, supply chain issues, and a tight labor market, it’s even more important to have the X factor that will keep your team not just afloat, but thriving. This moment is an opportunity to take stock, test your structure, and make sure you’re built to last.
In 2008 our company, Direct Technology, had really started to find its rhythm. With 100% growth from ’05-’06, 100% growth from ’06-’07, and 50% growth from ’07-’08, we really believed nothing could slow us down.
Then we began to feel the impact of a significant recession. The stock market fell 34%. Large enterprise customers cut budgets, reduced headcount, and stopped work on projects that were deemed non-essential. The impact to small and medium businesses that weren’t prepared was catastrophic.
It’s during times like those that you find out what your team is made of.
What we learned about ourselves is that we were doing many things right, but in many cases, we weren’t doing it intentionally. Productivity, quality, and discipline happened to be traits of the incredible people on the team. But as the going got tougher, we identified immediately that we needed structure behind maintaining that muscle if those traits were going to be sustainable and scalable.
We also learned the financial rigor we had in place was the strength of our organization. Weekly meetings designed to forecast revenue and expenses on a 12-month rolling basis gave us more insight into what was right in front of us.
Finally, we noticed strong managers coaching the team on the right way to make difficult choices and share bad news. No one wants to be the bearer of bad news, but if it’s your responsibility to do so, it’s also your responsibility to do it well—and fast, so your team can make course corrections early.
We made our way through the Great Recession thanks to these pillars, and 15 years later we’re still growing and thriving. But the only way to repeat success is to document and share it. We did that—and now I’ll share the framework with you.
We’re in a time of remarkable economic shift, for better or worse. For many, the business tailwinds have been strong. Money is flowing to venture endeavors; private equity is more active than ever in fueling our markets; companies are boldly chasing new frontiers. There has never been a better time to chase your goals and build a future.
But to ensure that future, you need to be able to answer these questions. At Direct Technology, we had the answers in our people and actions, but we had to turn them into known processes in order to thrive in a changing environment.
1. Do you have sound fundamentals for production and delivery quality built into your business or work plan? What are they? Write them down with your fellow leaders.
2. Do you have the discipline to execute on the fundamentals every day? What are your strategies to keep yourself and your teams focused and motivated?
3. Do you have the right financial rigor in your business to see future revenue, profit, and cash flow trends? What tactics do you use to keep your accounts accountable? These don’t have to be sophisticated technology solutions.
4. Most importantly, do you have the courage to follow through on the tough decisions that arise from the information you’re confronted with after answering the other questions (expense reduction, layoffs, production increases, etc.)?
Once you can say yes to all four of these, and back them up, you will know that you’re built to last.