By Charles L. Bradford, Founder and Chairman

Recession or Depression

Are we in a recession or a depression?  Whatever we call it is only a matter of semantics and really doesn’t matter.  The fact is that the economy is off by about 15% and still heading down.  What really matters is that businesses are suffering from a substantial loss of revenue, causing significant cash flow problems.   

First Survival

Couple substantial revenue loss with cash flow problems and a tighter credit market, and you have a crisis.  The three overarching goals for business have always been growth-ability, profitability and survivability.  Today, for many the paramount goal is surviving.  The knee-jerk response to this is a) an all-out scramble for more revenue and b) massive cost cutting.  Now, there is nothing wrong with seeking more sales and eliminating truly unnecessary spending.  However, there is a great deal wrong with doing it excessively or poorly.

Proactive marketing and sales is always good.  But a knee-jerk obsession with sales often leads to wasting valuable time chasing sales that are not going to happen.  Even worse, it often involves marginal pricing which damages profit margins.  And damaged profit margins are very difficult to reverse after the crisis is over.

Excessive cutting of “discretionary” spending also can do further damage.  There are things you spend time and money on that are not absolutely essential for short-term survival, but are essential for long-term success.  Cutting these is “penny wise and pound foolish”.  

Uncertainty

The problem facing you is made worse by great uncertainty about the economy.  How bad will it get?  When will there be a recovery?  How far and how fast will the recovery be?  What will our business climate be like after the recovery? 

What we do know is that :  

1. Things will get worse before they get better.
2. The bottom will probably not be reached before the end of 2009.
3. Things (e.g. competition and market behavior) will be very different after the recovery than before the downturn.
4. Anything else, including the particulars regarding what we know, is uncertain.

Strategic Planning Now?

We hear the following story many times from clients and prospective clients: “We want to do strategic planning, but not now, because a) we are all too busy scratching for new business, b) strategic planning is discretionary spending (i.e. not essential to short term survival) and c) we can’t plan when there is so much uncertainty.

What is wrong with this?  As previously pointed out, obsessive selling and the elimination of things that are non-essential for the short term but essential for the long term are damaging responses to the downturn.  Furthermore, great uncertainty is a reason to do strategic planning – rather than a reason to not do it.  Your entire situation has changed drastically.  Your strategy (intended course and direction) is probably in great need of review and revision.  It is time for a fresh look.

Strategic Planning Options to Consider

You have some quick and inexpensive options.  Fast Track Strategic Planning is a thorough strategic planning process that takes less time and money.  The In-House Strategic Staying Power Workshop is a one-day program specifically designed to give you a fast, low cost way to update existing strategic plans.  Or you can try to do it yourself using the Simplified Strategic Planning Manual.  (DIY is obviously less expensive, but it is more time consuming.)

Charles Bradford is the fonder and Chairman of Center for Simplified Strategic Planning and can be reached at cbradford@cssp.com.