Surviving the Recession - A Quick Review in 10 Essential Steps


“Control your destiny or somebody will.”– Jack Welch

It is apparent that the recession has started, although not declared yet because of changing calculations by organisations with vested interests. If you don’t believe the recession is here yet, then at least take note of the many people who are now suggesting it is not far away.

Irrespective of your beliefs about the current state of the economy, nothing will be the same for anybody in the future. If nothing else, COVID-19 has shown us that we all need to change and adapt to a new order, and often very quickly if we are to survive.

The most important factors exposed by COVID-19 is that protecting your cash, reputation and paying your debts in a timely fashion are paramount. These three objectives apply both to your personal and business lives.

Each of the following points will focus on one key factor at a time. To date, you have probably been inundated with information from many different sources on how to survive financially and emotionally in the short term. As a result, it would not be surprising if your mind has become cluttered with all sorts of information. It is therefore also unlikely you have had the time to think strategically about the future of your business in a calm and rational manner.

The first thing is to realise that waiting for the recession to be officially declared, or failing to take action on what to do next, are the worst things you can do. I suggest it is now time to focus on the future and to act positively to protect your long-term interests. Yes, there will be factors you have little control or influence over. There are however many other factors you can concentrate on which may help you to survive.

One source of information, amongst many is where you will find a number of strategies which may be of value. Two features in particular may be worth reading. These are “Anatomy of a Recession” and “What will the future look like in 2022 for B2B credit?”

To survive the recession and come out the other end in the best possible state, your objectives must include identifying whether you have the financial resources to survive, especially in the short term. If you don’t have these resources, working to close down your business with a minimum of financial, emotional and reputation loss, may be the best decision you ever made.

As Jack Welch advises, it is always far better to take control over your life rather than allow others to dictate it to you. The fact is when you drive the decision making, you retain a level of power over the outcome, even when the outcome looks predestined against you.

Point 1 - Financial resources and liabilities

“A business without cash, is not a business”, a simple and plain fact of business.

Accountants and insolvency administrators have also said over the years, that cash is the life blood of a business. Like a human body dies when there is little or no blood left in it, so does a business when it runs out of cash.

Today we live in a world which can and will drain our business and personal cash resources all too easily. The truth is that many people have always wanted your cash, whilst others have been unwilling or unable to give you cash in return.

Moving forward therefore, your first responsibility is to protect your cash resources, either those in the bank or available by accessing cash via finance options.

For trade debtors, make sure your business is paid as quickly as possible. To facilitate this objective, eliminate the causes of mistakes and ensure all invoices are raised quickly, correctly and sent as requested to your customers. It is these factors which enables prompt payment or gives your debtors an excuse to slow pay you or avoid paying your invoices.

In certain cases, you may wish to offer a discount for early payment. Take care how you frame the offer for a cash discount. There are always other factors which may come into play if the offer is put in the wrong fashion and accepted by your customers.

If you have obtained finance from creditors via loans, supplier accounts, or any other legal sources, paying off these creditors within terms, or even ahead of time for a discount, is vital.

Regarding overdrafts, we find they are just time bombs waiting to go off and can be one of the reasons for the demise of your business. In many cases and quite reasonably, they are used as a supply of short-term funding for seasonal payment factors. Unfortunately, they also quite often, become a funding life-line for day-to-day operations which is not their purpose. The fact is, that the use of overdrafts for day to day purposes will not be accepted over the long term by your bank.

It would be wise to remember what happened in the GFC regarding overdrafts. Many business owners at that time were called to meet their bank managers during the early stages of the GFC. On arrival, they were told in no uncertain terms to:

  1. clear the debt;
  2. provide security; or
  3. sign the personal loan agreement handed to them for their signature, on the spot.

On review, you may identify there is no possibility that your business will survive long enough to trade its way out of insolvency. In that case, you would be wise to close the business down, and I stress, in a responsible manner and within the law. In doing so, you are protecting three of your most important assets of cash, reputation and emotional well-being.

If you are in doubt however on your ability to complete the closure of your business, or lack sufficient cash resources to clear all debts, seek help from a reputable firm or professional.

This first point is the most essential point of all the points which follow. If you cannot confirm and have confidence that you have the means to start the process of rebuilding your business for survival and success, then all other efforts are a waste of time, resources and emotional energy.

Point 2 - Your Reputation

Your reputation is a key factor for business and personal success. Over the years, many business people, have failed to protect their reputation by thinking they were exempt from the loss of reputational damage. It may be these people felt they were immune from loss through money, status, “smart business strategies”, which were often proven to be not so smart, or by bluffing their way through tough times in the past.

If you and your business have a bad reputation, you are already in trouble. Regaining a good reputation will be an uphill battle and even then, you may find some business people will still not trust or forgive you. If you have had a good reputation in the past, it is of paramount importance that you work to keep it intact.

Make no mistake, we are in for an extended period of disruption and trauma not seen since the 1930s Great Depression. The closest we have come in recent times to a depression was the Global Financial Crises (GFC). The learning experiences of the GFC unfortunately have been largely forgotten. It is likely for many people who went through the GFC, the same experiences will return like a bad nightmare as the current recession deepens.

Bluffing, using “smart business strategies”, paying outside of agreed business terms and a lack of communication, will therefore not hold up in the long term. You will soon be found out as we are entering an entirely new business environment post COVD-19. What was therefore deemed to be manageable in the past, is now over.

In Point One, I mentioned the importance of quickly closing down your business ethically. The importance of taking this action cannot be over emphasised in protecting your reputation. After all, you are not only trying to reduce losses to your cash, reputation and emotional wellbeing. You are also acting to protect your short-term resources whilst acting for the long term, which may include making a business comeback if desired.

There are less places to hide your bad behaviour these days. If the media doesn’t have a story about you and your business, some other party is likely to have the evidence of any bad behaviour. Protecting your good reputation will be equal to dollars in the bank for the future.

Point 3 - Cash Protection

If you wish to survive the next few years, you must protect every dollar leaving your business and quickly seek the return of every dollar owed.

In other words, you need to ensure every payment made has been properly authorised and you are not paying fraudsters. Likewise, getting paid for all outstanding invoices as quickly as possible if you sell on credit, is also essential.

Protecting the cash in the bank, is relatively straightforward when treated properly with a respect and to well known risk management norms of behaviour. However, in these troubled times, it would pay to review everything you do and complete an audit on your processes by taking extra precautions.

Whilst reconciling the bank account(s) is a normal practice, completing the reconciliation of suppliers and customers accounts is often rarely completed accurately these days. In future, it is a MUST that every supplier and customer account be reconciled. Reconciliation of these accounts allows you to pick up duplicate payments, payments for cancelled invoices, making sure every deduction by customers has been authenticated etc. It would wise to remember the old saying, “… computers don’t make mistakes, people who input data do!”

The truth is, not only myself, but many other diligent credit and accounts payable managers have saved their businesses many thousands of dollars by correctly reconciling their accounts payable and accounts receivable operations.

Due diligence and vetting all suppliers and customers to authenticate ownership and trading terms is a must. Likewise, as is monitoring and completing due diligence on all emails received to ensure you only pay authorised invoices. After all, we are now living in an age where fraud, in all its forms, is a major business problem.

Professional fraudsters are very good at what they do, because FRAUD is their business. For the opportunist fraudster, their motivation is cash for lifestyle, drugs or gambling.

To assist in protecting your cash, the employment of qualified and dedicated professionals is essential. The right people may be annoying at times with their questions and suggestions to maintain strict adherence to procedures. In essence, all they are doing is trying to do the “right thing” and protect your cash. The truth is, good people are able to do things that technology can never do.

At the end of the day, technology installed for the wrong reasons will aid and abet fraudulent behaviour, create extra unpaid work and fail to resolve problems. All these issues will have to be resolved by people anyway. You may as well therefore invest in good people from the start.

In the coming recession, irrespective of how severe it may be, cash will always be an essential component of survival and even, perhaps growth. Protecting your cash is therefore a no brainer!

Point 4 – Employees and Contractors

PEOPLE, make or break businesses.

All the people in your business, from management to the warehouse, maintenance or accounts employees, should be working as a team to keep your business going.

Unfortunately, those with vested interests, the disenfranchised, the Marvellian types and those with alcohol, drug and gambling problems, will be causing damage. It is these people, in addition to people from outside your business who will attempt to undermine your business at every opportunity. These people include the do-gooders of the world, bureaucrats and legislators who have never operated a business, slow paying and manipulating customers, suppliers with poor deliver reputations and fraudsters who just want your money.

It is therefore critical, irrespective of the state of the economy, you employ good and honest people throughout your business. It is these people who will strive to do the right thing by the business and people who employ them. If your business succumbs to the temptation of employing people who are cheap, or underpay others, or those who leave their brains at the front door of your business, then this not a good recipe for survival.

What is especially important is to employ people as appropriate for the size of your business. Based on many years in business, if you need to employ contractors, they are best from your own country and from small businesses with small numbers of employees.

In larger businesses, all people involved in the business should be, in the majority of situations, direct employees. At the end of the day, no person can serve two bosses properly. This applies particularly to sales, customer service and accounts people. After all, these are the knowledge workers and key front-line protectors of your business.

Cheap upfront employment options, such as outsourcing critical tasks to people from an overseas country, is fraught with trouble. When you employ mercenaries to guard the safe, you cannot complain if they steal the safe or collude with your competitors or fraudsters. Likewise, if you allow outsiders to manage your customers and suppliers, you cannot complain when they leave and take your customers and suppliers with them.

Even in the good times, we have seen many employees and contractors do the wrong thing. I would suggest in any recession, this situation will only get worse. All people are tempted at some stage, if under enough pressure, to do the wrong thing. Counteracting the desire to do wrong, can only be achieved by employing the right people under the best possible conditions.

In a recession, people employed for the right reasons and with the right intentions to do good, can be positively motivated to help your business survive. These people also add value because they already know your business’s customers, suppliers, operating systems and where efficiencies can be gained. This knowledge is worth dollars in the bank to your business and is gold in the hands of your competitors. The importance therefore of managing these people through tough times cannot be overestimated.

Point 5 – The Right Suppliers

As part of your survival strategy, reviewing your supplier list is essential. Like any other business input, you need to know that your suppliers will do the right thing by your business.

Accordingly, the two most important factors you need to cover are due diligence on their business practices and the suppliers’ flexibility with delivery and payment options.

Completing due diligence on your suppliers is essential. Operating a business in the future will become far more complex than just buying the right product or service. Today, there is the social element, commitment to quality, operating ethically, plus government regulations and legislative factors to consider. These factors and the advent of social media have added a complexity to operating a business not seen in the past. You cannot afford to neglect these issues if you wish to survive for the long term just because we are entering a recession.

Obviously the first place to start the due diligence process is with reputation.

Ensuring your business has a good reputation is a good start. For instance, does your own business have a good reputation? Other factors of concern will be whether your business pays on time, has good communication channels with its suppliers, raises valid credit claims, or claims which are designed to delay payments. In other words, is your business a good customer?

In completing your due diligence exercise, the following questions about your suppliers are important. It is essential to ask the following questions when asking any new supplier or when existing suppliers when goods and services are not delivered as expected.

  1. What is the reputation of your supplier’s management, employees and directors?
  2. Where does the supplier obtain their goods from and/or their service providers?
  3. Equally important, is the supplier willing to provide information on their suppliers and confirm the quality of the goods and services supplied?
  4. Will the goods and services be delivered in a timely manner or as required?
  5. Can the supplier be relied upon to deliver special orders if required?
  6. Does the supplier have a policy of helping your business by allowing agreed part payments over a period to help your business with a special contract or project?
  7. If goods and services cannot be supplied as required, is the supplier upfront about their inability to deliver the goods and services?

The above questions and identified results are more important than ever as staying in business is far more complicated than in the past.

6th Key Factor – The Right Customers

Customers are another factor which can make or break your business. This opening statement may sound trite, but is the truth.

We are now entering a new business paradigm where the focus must always be, “What is in it for our business (WIFM)?” Focusing principally on customer needs to the exclusion of your business’s welfare, means the customer gains preferential treatment to that of your business. If this happens, the needs of your business may be affected negatively.

In the past, many business people focused on what their customer wanted, only to find out, the customer still did not buy. Furthermore, even if the customer did buy, they often did not pay within terms, despite signing agreements to do so. They may also refuse to pay at all, or wanted another discount, or were uncooperative. In other words, they were using your business as a source of funds to fund their own businesses.

Finding and keeping the right customer is everybody’s responsibility within your business, NO EXCEPTIONS. From today, it is this emphasis which will be a major survival factor.

Identifying the right type of customer means focusing on making a profit, or at least breaking-even, or identifying whether there are any other identifiable benefits. No longer will the wishy-washy feel good statements from management and sales be acceptable. If you cannot quantify the cost-benefits in dollar or business terms for keeping an unprofitable customer, then you risk the viability of your business.

To identify the right type of customer, you also need to understand the words used by your customers. These three examples will give you an idea on the importance of words.

Potential,suggests you should run for the hills and tell the customer to go elsewhere. Too often this word has led to the destruction of value to the supplier. In the coming years, potentially more businesses will go out of business than at any other time since the 1930s great depression.

No, is one the most under rated words used when selling. If the customer walks away without asking why, or with a snide comment like “… well I will just buy from your competitor”, in my view that is perfect. Your business has probably just saved a lot of money.

“We will pay you when they pay us!” is rarely stated upfront, and usually used by the customer after the goods or service has been supplied. If you understand the meaning of these words, essentiality the customer is saying they reserve the right to “…never pay you.” Dealing with these customers is another sure-fire way of going out of business.

Finding and keeping the right type of customer will not be easy in the future. It will also be a lot of hard work. If you get it right however, you stand a chance of winning the long-term game and surviving the recession.

7th Point – Technology and Cyber Protection

Increasingly businesses will need to use the best technology available for their type of business and practise first-class cyber protection hygiene.

Most people think when we talk about using technology in business, it will:

  1. be cheaper and more efficient than employing people;
  2. require less people in the business;
  3. make our business more efficient;
  4. be acceptable to all the business’s stakeholders; and
  5. replacing the technology with updated versions will be risk free.

The truth to these thoughts is often far different in practice. The reality in fact, is that you have swapped one form of problems for another set of problems. We are also finding these newer problems are no easier to fix than the older problems, and often some of these problems are unfixable.

One of the best places to test the effectiveness of the technology versus people equation, is in your accounts payable and receivable functions. Whilst there have been tremendous improvements in the efficiency of a number of functions, in other areas, liabilities and problems are increasing.

Over the last 20 plus years I have been extremely lucky to practise my profession in both local and global business environments. In that time, certain truths have become evident. The practice of cash protection and collection has been assisted greatly when technology is used properly to enhance traditional disciplines and processes.

Unfortunately, technology has also often been used to achieve other managerial objectives. As a result, and with the respect of the professional and experienced employee marginalised, the result has been less successful. In fact, I would go so far as to say, today many of the businesses which have taken this second approach, can no longer calculate their total liabilities or loss of cash.

In turn, particularly for this second group of businesses, the protection of the business is now compromised when it comes to cyber protection. It is really difficult to practise good cyber protection hygiene when the strategies of using second rate technology, cheap employees, outsourcing and minimise the value of business disciplines, are the ethos of business decision making.

Now with the overuse of technology, coupled with poor employment practices, cybercrime is another factor all businesses have to manage. As the technology experts keep telling us; “… it is not if cyber criminals will attack your business, it is when!”

There have always been fraudsters, slow, difficult or manipulative customers, bad suppliers, poor management and cheap or disenfranchised employees as part of business equation. These business actors are only going to increase in the coming years.

The use of the best quality technology and employment good people within your business has always been important for business success. If you wish to survive this recession, these two business inputs will be even more important in the fight against cybercrime and fraudsters.

8th Point - Business Disciplines

The benefits of maintaining good business disciplines can be seen in the positive performance results of your business. For instance, a positive business decision could be; not to deal with suspect or dodgy suppliers whose products may cause problems in the future.

In tough times, cheaper goods and services always look good at first. The cost of defective products, loss of reputation, fixing problems later on, soon make the initial purchasing decision and lack of due diligence awfully expensive.

Unfortunately, when business discipline is mentioned, it is all too often treated in an emotional and negative manner based on the upfront cost basis of losing sales, or a fear of missing out on a great deal. What is rarely mentioned in a calm and measured manner are the dollars and reputation lost due to an undisciplined act.

In the coming years, the first effect of previous poor business disciplines will soon be seen in bad debt write-offs, or claims for compensation due to negligence of product or service. Many of these losses may have been avoided with a focus on a disciplined approach when buying the goods or using service providers.

Moving forward, business disciplines will play an important part on whether your business is forced to close, survives, or grows into a better business. Good business discipline is based on both historical business norms plus proper due diligence on the current business environment.

In a recession period, good business disciplines are often marginalised or ignored in the false hope that will assist the survival of the business. The outcome is usually the opposite. The areas of greater risk where business disciplines should not be forgone or marginalised are:

  1. dealing with risky, bad paying, or new customers,
  2. ignoring the red flags of problematic behaviour with new or existing customers,
  3. allowing debt owed to drift out,
  4. failing to confront problems with debt owed to suppliers and financiers,
  5. dealing with less reputable suppliers,
  6. employing cheaper or less professional employees,
  7. ignoring employee observations and suggestions on dealing with customers and suppliers,
  8. picking up the telephone and talking with customers and suppliers about problems,
  9. taking over a competitor or moving into a different marketplace,
  10. understanding how to deal with preferential payments, etc.

Strong business disciplines are always important. It is surprising when your business actually adheres to strong disciplines how often you see the benefits. In addition, a non-monetary benefit of good business disciplines frequently ignored is peace of mind. It is really difficult to concentrate on surviving in difficult times when your mind is cluttered by problems caused by bad decisions or by poor business disciplines.

9th Point – Your Business Model

The problem of business model rigidity and management’s lack of flexible thinking is also seen in the early stages of COVID-19 restrictions. Many businesses were so unprepared because they did not appear to have made any provision for risks in their current business model. As a result, many dollars and much time has been lost which will never be recovered.

It is not my intention to prescribe what business model might work in the future as there are so many variables. The right business model for your business can only be crafted by you to meet the specific requirements of your business within the current business environment.

If the above information suggests the concept of business models is invalid, that is not my intention. Business models do have a value at all stages of the life of your business. In the first instance, preparing a business model with full diligence and SWOT analysis is a useful exercise. This is the starting point for your business. If you prepare your model honestly, this will help you to understand whether the more aspirational concepts of your model are practical.

As your business progresses, you will find out whether your objectives were achieved. From there you can plan the next stage. As you progress through each stage and business model, you come to learn what works and what doesn’t, or what might be changed to work better for your business.

The one thing you must never do, is to hold your business model to be the end game of running your business. All business models need to be constantly reviewed for relativity. Herein lies the problem and probably the hardest thing to reconcile. In developing and working to your business plan, it becomes an emotional component of who you are. If you can let go of the emotional component by changing, it can help you develop the best business plan for your business’s survival.

10th Point – Legally Putting Your Competitors Out of Business

There is no honour, or social kudos in putting your competitor out of business illegally. There are usually negative financial and legal implications if you have acted illegally.

Does that mean there are no other means to put your competitor out of business? Of course not. For instance, it is not your fault if your competitors operated improperly over the years and as a result, they go out of business.

It is also perfectly legal and practical, to want to see your competitors go out of business. After all, the number of your respective customers will decrease in difficult times and the fewer competitors you have, the greater chance you have of making a sale. Now, I am not suggesting you deliberately target your competitors. Your primary focus must always be on your own business’s survival and growth. Focusing on deliberately eliminating one or more competitors means you are not focused on your major objective of making sure your business stays viable.

To make life more difficult for your competitors legally, starts with giving your customers every opportunity to stay and few opportunities to leave. To achieve this objective, you will need to operate a customer friendly and mistake free business. To achieve this objective will include:

  1. never underestimating the power of CASH;
  2. operating with one eye on profits and the other on social accountability;
  3. learning the “Art of Business” which includes understanding that NO should not be the end of the sales conversation;
  4. maintain business disciplines to reduce mistakes, continue with due diligence and hold people accountable for their decision making;
  5. create a great business team, because one of the enemies of success is disharmony within your business;
  6. educating all your employees to be the best they can be;
  7. employ salespeople not just order takers and employ credit and accounts people to promote your business at every opportunity;
  8. employ people experienced in the real world of business;
  9. try to encourage slow payers to become better payers and encourage positively the unprofitable customers to go to your competitors; and
  10. if previously unprofitable customers return, give them a chance to become profitable again.

If you work on eliminating the weaknesses, maintain good business disciplines and create a profitable sales ethos, then you have a chance of keeping every profitable customer. If this objective is achieved, you can perhaps stay in business by robbing your competitor as a by-product of operating profitably and sustainably.


The 10 key factors presented are designed to help you stay in business by operating and selling profitability throughout the recession. There are no guarantees in business at any time. During a recession, it will be even more difficult than the “old normal” times. Much of the information presented has been based on tried and true business practices over the years, many of which have been ignored in recent times.

The way forward to a “new world order” will therefore involve reinstating the best of the tried and true practices of the past, coupled with the best technology tools and practices of today. Get the process right and there is every chance, your business will survive the recession. Better still, you will more than likely come out at the other end with a stronger and more viable business.