Lessons Learned from the Great Recession Might Just Come in Handy Soon
When you own or run a business, you try to keep one eye fixed on the future with the other immersed in the day to day. While it can be a struggle to find the time, effective CEOs work on their company at least as much as in their company. And that means looking ahead.
That’s why my ears perked up recently when I heard about a poll of business leaders. About four of every five believe we’re in for an economic downturn if not a full recession by 2020. While that can of course be unnerving, when you’ve been in business for decades, it can also cause you to reflect on how many helpful lessons you’ve learned from past downturns. Lessons that just might help you survive during the next recession even as you lay the foundation to flourish soon after that.
So let me tell you a story about the lessons we learned a decade ago at the Torch Group during the Great Recession.
Quick to Fall
In 2008, we were riding high. Our steady growth had caused us to run out of office space, and as a result, we signed a lease for new space two and a half times as large. We were also on the verge of hiring a handful of new employees. And then the bottom fell out.
If you were in business just over a decade ago, you remember that awful feeling as the apocalyptic news kept coming in late 2008. The stock market plunged wildly, Wall Street firms that had survived the Great Depression suddenly went under, and Congress mobilized to pass a massive stimulus bill.
It was scary.
Good in the Bad
Our executive search business came to a standstill. No one was hiring. We had to cut back from nine employees to just two—my partner Michele and me. We even dipped into our 529 education savings account to keep the lights on.
But the good news was that we had seen the writing on the wall before the very worst hit.
Many of our best clients were letting as much as a quarter of their employees go. So we decided to start a new business—helping them with outplacement services for their downsized executives. That countercyclical revenue stream really helped. We also went back to a line of business we had abandoned during our rapid growth period, placing interim contractors. All of these moves kept us in business until things picked up again on the recruitment side in 2010.
Looking Ahead
The lessons we learned a decade ago—the need for flexibility, for looking beyond your own four walls, moving quickly, and scouting out new opportunities for growth—are now part of our company’s DNA. We bake these lessons into our strategic planning process, and continue to look ahead at least two years.
With a recession possibly looming ahead, we are considering a number of potential opportunities related to the talent acquisition and search business—from offering fractional talent such as CMO’s or CPO’s to training as a service to leadership assessment and development. We’re also considering focusing on a few more countercyclical industries, such as healthcare and government contracting.
As I think back on all the lessons we learned during the worst times, I see now why so many great companies were begun during bad economic climates. The Kauffman Foundation sponsored a study about a decade ago, which found that more than half of the companies on the 2009 Fortune 500 list were begun during a recession or a business downturn. As counterintuitive as that might seem to some, it doesn’t surprise me. That’s when talent is more available, when companies get more creative, and the lack of financial resources focuses the mind to find other ways to do things.
Whether or not we’re in for a recession soon, I believe these are crucial principals that can help every company succeed.
To talk more about industry tips and trends, please contact Ron Torch, CEO, at rontorch@torchgroup.com or 440-519-1822 x101.