Over the last few years, the economy has been anything but certain. Many believe metrics such as red-hot inflation numbers are harbingers of doom while others counter that the strong labor market and wage gains signal a smoother road ahead. While no one can peer into a crystal ball, one thing is clear: we will enter a recession at some point in the future.
As the global economy continues to face uncertainty and instability, it’s important for companies to prepare for the potential impact of a recession. With thoughtful planning and strategic decision-making, businesses can weather the storm. At Chem-Dry, we’ve learned from our experiences navigating economic downturns and have developed a set of guidelines we believe can benefit other global companies.
The Importance of Decision-Making
When facing a recession, it can be tempting to make short-term decisions that may have negative long-term consequences. But business leaders must focus on the same long-term end goal, whether it’s a simple task or a major strategic decision. Every action must align with your long-term strategic vision for the future.
For example, when the pandemic hit, there was a sharp increase in demand for sanitizing services. While we were already providing a basic version of this important service, we saw an opportunity to expand it further with an advanced spraying service to drive revenue and help our customers and communities. However, we didn’t require that all franchisees adopt the expanded version of the service despite its short-term popularity, as we knew that post-pandemic it may not be a significant part of their core business. This approach allowed us to avoid creating unnecessary burdens on our network and instead continue to focus on the brand’s long-term goals.
Anticipate What Might Happen and Take Early Action
To prepare for a recession, companies should anticipate potential challenges and take early action to mitigate them. Yes, this means understanding the macro-economic picture but it’s equally important to stay abreast of your specific lane – your business, industry, and parallel industries.
Multi-path decision trees can be helpful exercises to explore different scenarios and identify key areas of the business that require attention. For example, we knew that the supply chain would continue to strain our system. In response, we developed a program to help our franchises owners save money on shipping through bulk buys and payment terms. This freed up more cash for them to invest in other areas of their business.
In addition, we recognized that price pressures and inflation would be major issues for our industry. While the traditional advice had always been to raise prices, we knew that this would not be feasible for many of our most loyal customers. Instead, we focused on maintaining competitive pricing and creating additional value for our customers, which has allowed us to stay ahead of the competition.
How to Communicate a Centralized Vision Beyond the “Survive Tomorrow” Mentality
During a recession, it’s easy to become hyper-focused on day-to-day challenges and lose sight of the big picture. Ongoing communication about daily challenges is essential, but they should be framed against your larger objectives. This requires repetition and an open dialogue with key stakeholders.
For example, we send weekly emails to all franchise owners, each covering a different area of the business, such as marketing, operations, customer service, etc. These big-picture messages help ensure that franchisees keep their eyes on the prize and that everyone works toward common goals.
How to Look Beyond Layoffs and Maximize Your Existing Resources
During a recession, companies may feel pressure to lay off employees. However, maximizing resources ahead of economic slowdowns may mitigate the scope of necessary downsizing measures.
It’s important to apply this mindset to all aspects of your business, from personnel to technology. We have embraced the principle of “do more with less,” which empowers everyone from employees to franchise owners to step up and become more productive through streamlining processes, automation of best practices and strategic prioritization. To become comfortable with this approach, it’s helpful to keep in mind that people are typically much more capable than they are often given credit for.
Technology-driven automations can dramatically streamline your business. For example, consider the shifting trends in communication and customer service to build an online messaging system to connect with customers in the tools they wish to communicate. Over time, this type of solution not only results in significant labor savings but it also creates a better experience for the customer.
The Bottom Line
It’s important for global companies to take proactive measures to prepare for the next recession. Effective decision-making, anticipating potential challenges, clear communication of your vision, and maximizing existing resources are all key strategies to navigate through uncertain times.
By Ed Quinlan, President of Chem-Dry, part of the BELFOR Franchise Group. Chem-Dry is the world’s leading carpet and upholstery cleaning service with a network spanning 50 countries, serving over 45,000 homes and businesses a week worldwide. The Chem-Dry franchise system began in 1973 and started franchising internationally in 1986. Chem-Dry is committed to supporting franchise owners by providing them with the tools and resources they need to succeed in any market condition. By applying these principles, we are confident we’ll continue to grow and thrive – regardless of fluctuations in economic conditions beyond. For more information about Chem-Dry and its franchising opportunities, visit https://www.chemdry.com/.