Advice for Operating in a Recession?

Like many of us, I am too young to have operated through a recession.

Turnaround has been my focus for a while, but always in the context of a relatively healthy economy, meaning both equity and credit have been very, very plentiful. I have been able to leverage vendor's balance sheets to clean mine up, juice the shit out of creditors, raise equity, etc np.

In 08/09 it seemed like liquidity vanished overnight, making the above impossible. In Q1 we start deleveraging quite a bit, building more of a cash buffer, etc. Very glad we did.

What are other steps we should be taking to operate in an environment where cash doesn't fall off trees?

 

Cut the fat early, focus on cash maintenance.

If there are employees that can be cut, think through the plan to cut them. If there are projects that can be postponed, do that and save the cash. It's not just cutting, investing in automation and better processes, to pull cost out in the near future is also a viable option.

Lean into vendors and push your customers to pay early. Think through whether a small discount is acceptable for faster payment from customers.

There will still be lenders of last resort but that gets expensive.

Essentially, turn over every stone for inefficient and ineffective processes. During covid, a fair amount of our clients cut heads and other operating expenses so they could make it through, ended up helping the businesses in a way they wouldn't have achieved otherwise. 

It's a tougher mindset to shift into, but ignore the "history" of the business and try to analyze what an efficient, lean operating business would look like, then you can plan how to get there, then you can make decisions about what would be worthwhile to pursue.

Edit: get as granular as possible. If the business has stores / facilities, do it at that level, otherwise regions, states, etc. Sometimes things are hiding in consolidated numbers.

 
Five Star Man

Cut the fat early, focus on cash maintenance.

If there are employees that can be cut, think through the plan to cut them. If there are projects that can be postponed, do that and save the cash. It's not just cutting, investing in automation and better processes, to pull cost out in the near future is also a viable option.

Lean into vendors and push your customers to pay early. Think through whether a small discount is acceptable for faster payment from customers.

There will still be lenders of last resort but that gets expensive.

Essentially, turn over every stone for inefficient and ineffective processes. During covid, a fair amount of our clients cut heads and other operating expenses so they could make it through, ended up helping the businesses in a way they wouldn't have achieved otherwise. 

It's a tougher mindset to shift into, but ignore the "history" of the business and try to analyze what an efficient, lean operating business would look like, then you can plan how to get there, then you can make decisions about what would be worthwhile to pursue.

Edit: get as granular as possible. If the business has stores / facilities, do it at that level, otherwise regions, states, etc. Sometimes things are hiding in consolidated numbers.

Yeah we're pretty strong at operational improvements, cutting working capital needed to run a co etc, but was more curious from a macro perspective? IE can we push wage cuts if macro falls out and unemployment goes up? 

 
Most Helpful

Quas nemo et voluptas iste quisquam et. Minus perspiciatis temporibus vel.

Officia reiciendis id eius modi officiis voluptate eos. Ipsum incidunt occaecati dolorum illum quo esse eligendi et. Nam molestiae consequatur rerum enim tempore quo. Magni sapiente dicta quibusdam esse optio sed.

Iure sit est molestiae ex adipisci quis illo nihil. Dolorum quis odio corrupti est ipsa dolor.

Career Advancement Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 99.0%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

March 2024 Private Equity

  • Principal (9) $653
  • Director/MD (21) $586
  • Vice President (92) $362
  • 3rd+ Year Associate (89) $280
  • 2nd Year Associate (204) $268
  • 1st Year Associate (386) $229
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (313) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
DrApeman's picture
DrApeman
98.9
9
GameTheory's picture
GameTheory
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”