How does a company prepare for an economic recession?

21706 2019-05-13 21:53

Warning Signs of Economic Recession

How did Resilient Company Prepare?

Back in 2008, companies turning out to have higher total shareholder return(TSR) did these things:

  • By the time of reaching the lowest point of the recession, they had increased EBITDA(Earnings Before Interest, Taxes, Depreciation, and Amortization) by 10%.
    • By reducing operating costs earlier in the recession, and more deeply.
  • Introduce more flexibility into the investment-planing
    • Reduce > $1 per $1 of total capital on their balance sheet
  • Prepare far more cash than peers for acquiring assets once on the upswing of the economy.
  • Maintain high-value customers’ loyalty.
    • Forgo revenues from price changes, while peers are reducing the price.

However, slashing costs may hurt the brand and the company moral.

Finally, getting ahead of peers create a huge advantage.

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