It’s time to start planning for business recovery

If you think it was difficult to weather the downturn, hold on to your hat. The hardest is yet to come.

Is it too early to start planning for the upturn? I don’t think so. In recent months we’ve seen strong indicators that our business is in full-recovery mode. In response, we’ve spent a lot of time strategizing how we’ll manage a rebound.

Here’s how I see it:

We will face two rather large challenges during our recovery. These might not be the same challenges you’ll face. However, I’m guessing they might sound familiar.

Challenge #1: Cash constraints

Most of us have spent the last several years focused on survival. We’ve cut costs, collected aggressively, stretched our payables, and deferred investment and maintenance. We will find the recovery equally challenging.


An increase in revenue will require cash— cash to increase payroll and fund receivables, cash to cover deferred maintenance, cash for investment. Firms that have spent the last several years in survival mode don’t have cash.

To overcome this challenge, continue to focus on cash flow management. Start with a good forecast. If you anticipate a shortage of cash, respond early by:

1) Maintaining your focus on controlling costs. You’ve learned how to run your business on a shoestring. Don’t abandon those habits at the first sight of recovery. Instead, stay focused on the small things that have kept your business healthy.

2) Being completely transparent with your bank. By now, you’ve developed a strong relationship with your banker. If that’s true, your banker will recognize (along with you) when your business is legitimately in recovery. Keep them informed; you’ll need them.

3) Avoiding decisions that build new, permanent expenses into your cost structure. Consider outsourced services such as cloud IT services or outsourced payroll services. These subscription-based expenses can be reduced or canceled to adjust to future business fluctuations.

Also, consider compensation strategies that reward performance but that avoid ongoing payroll increases. Bonusing aggressively in the near term may be a more effective compensation strategy then making permanent payroll adjustments. We’ve all learned that these expenses are difficult to unwind.

Challenge #2: Motivating tired staff

They’ve been there in the trenches with you, and you’ve asked a lot from them. Perhaps they’ve stuck around because they were loyal, or perhaps you’ve just been a consistent job in an uncertain environment. Shortly, however, the promise of a job won’t be enough to motivate key talent. Keep your superstars by:

1) Reaffirming your vision. Now is the time to communicate clearly the purpose and vision for your company. Our employees want to be involved in something meaningful. Remind them why your firm is great. Help them understand why you are different.

2) Sponsoring and promoting community involvement. These efforts improve your company’s image and help people give back to their communities. Again, this helps define your firm’s purpose and makes employment within your firm more than a job.

3) Sharing successes loudly. Your star employees are hungry for success stories. Remind them that they’re part of a winning organization they can be proud of. Make sure you celebrate every win.

4) Choosing incentives carefully. As opportunities for employees increase, firms will need to be more creative about the ways they recognize and compensate high performers. Again, look for ways to motivate without increasing permanently your cost structure.

Remember that recognition can take many forms. Oftentimes, a very sincere thank you, a thoughtful note, or a personalized gift can go a long way in helping people recognize they are appreciated and valued.

Of course, your approach to these two challenges may create a management tug-of-war. On the one hand, there’s a need for fiscal constraint; on the other, a need to motivate and inspire. Certainly, many employees are demotivated by the constant focus on cost controls.

Choose a balanced approach to overcoming these challenges by managing cash flow carefully, ensuring your business is sustainable. At the same time, seek for cost effective and personalized ways to connect and motivate employees.

Do you see this differently? What are the challenges you are facing as your company recovers? Share your thoughts by e-mailing me.

Derrick Smith is a partner with consulting firm MacKay & Sposito, Inc. (M&S), an infrastructure planning and design firm based in the Pacific Northwest. M&S services Water Resources, Energy, Community Development, and Geospatial clients and markets throughout the Pacific Northwest.

Derrick publishes regularly in several regional and national journals that focus on business development, project management, and human resources topics related to his industry. Derrick Smith’s thoughts and past articles can be found at He can also be followed @derrick_smith.

This article first appeared in The Zweig Letter (ISSN 1068-1310) Issue # 866

Originally published 6/7/2010

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