Older managers may recall a cutthroat scene in the last recession during the early 90’s when it became fashionable to steal your neighbour’s business. Many firms failed to react swiftly enough cutting costs too late and too little. Perhaps worse was when they finally started to wield the axe they failed to discriminate chopping their sales and marketing divisions along with admin and production staff. Consequently, when the downturn ended and customers came flocking it was the competition that reaped the benefit.

According to Ram Charan the author of “Leaders at All Levels” and “What the Customer Wants You to Know” the best plan during a recession is to keep on building. When sales are scarce, the temptation is to go after discretionary spending. That’s fine but equally important is to keep innovating, brand building and a program for new product development. Sacrificing your future for a slightly more comfortable present is not worth it. If you keep building the business, you can come back strong.

It may seem counter-intuitive to pay bonuses when profits are falling, but sometimes it’s the right thing to do, particularly if a specific unit is beating the competition. Rewarding excellence - through new challenges, public recognition, and, yes, money - in bad times as well as good builds loyalty. In fact, a downturn can be an excellent time to poach; people who might have stuck with a company because of vested options or other monetary incentives may be more willing to consider joining your company when those vanish.

Get information from where the customer action is, and get it to the operating people - fast. Companies should do so routinely, of course. But they don’t. It’s counterintuitive but true that when the economy slows down, the pace of decision-making has to speed up, because you can’t put off the tough choices anymore. The companies that are readiest to act on solid information are primed to shoot ahead of the business cycle. When you are down, do not just sit there wondering what to do next but get out of the office and talk to people, inside and outside, to figure out an escape plan. Employees should be consulted frequently and honesty. Outline the problems, explain your plans, and ask for advice. Listen. You will be amazed how much goodwill simple courtesies can create.

Ram Charan advocates intense brainstorming by key people from operations, service, marketing, and sales. Requiring them to thrash out a realistic plan that includes their expectations for the next 24 months or so asking hard questions like what if demand goes down and equipment prices keep going up. Then devise a coordinated plan to meet the challenges and keep this intense brainstorming going. Repeat the exercise every month and when the facts change, to paraphrase Keynes, so must your strategy. Research has shown that when people have thought through their reactions to high-stress scenarios - such as a disaster or being a victim of a crime - they are much more likely to survive it.

In good times, companies manage profit and loss; in bad times, cash is king. Therefore, you need to identify your higher-risk customers and losing their business if necessary. What you don’t want to do is finance your customers purchase at a time when they may have lost the ability to pay. Alternatively, and this helps build good relations with customers, try to work out a way to keep going - for example, by helping customers to finance purchases using leasing, third-party credit (where you are not at any risk) or supplying smaller quantities. The point is, a downturn is a very good time to do a quality check on your customers.

By all means cut costs if it makes sense to do so, but make sure there is purpose in how you do it. The key: If you have to cut costs, don’t try to be fair about it the world does not inflict pain evenly, and you have to deal with that reality. Being on the downside of the business cycle is not much fun. That said a slump could also be an opportunity if you use the sense of urgency to improve strategy, management, and discipline. In that sense, happy and unhappy times are alike: The companies that take charge and out compete will win.

Moreover, when the good times are back MTELS Marketing will use all the technology on behalf of clients to tap into new ways of selling and promoting your business by subscribing to our marketing and search engine optimization (SEO) plan.

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