Four Business Lessons I Learned in the Great Recession

Four years ago, world financial markets were in turmoil and the economy plunged into a recession that it is only slowly recovering from. It was a great time to start my new consulting practice. 

Not really. But I did learn some important lessons and, while it may sound counter-intuitive, my consulting practice is probably stronger today than it would have been if I had launched it when times were good. Some of these lessons seem broadly applicable, so I’d like to share a few in this post.

1. Cash is key to survival. I had some savings when I first began and thought it would be plenty until I could start generating a living wage off of my business. I was wrong. I should have saved more. Fortunately, I survived, but not without a lot of anxiety that could have been avoided if I had started out with more cash on hand. Now I work with a lot of organizations that have very little, if any cash reserves. Belt-tightening at home meant eating out less often and not taking fancy vacations. Unfortunately, belt-tightening for non-profits caught up in the recession meant laying people off and other unpleasant measures—just at the time when many needed to ramp up the services they were providing. We’ve got to get beyond the mentality that charities have to operate on a hand-to-mouth basis and that having a cash reserve is unseemly.

2. Be lean and mean in your operations. Since there wasn’t a lot of spare cash floating around, it forced me to avoid unnecessary spending. A fancy office with a prestigious address would have been nice. So would a whole suite of assistants to do my bidding. Instead, I converted a spare bedroom into an office and have done everything I could do myself. Because I had minimal overhead, I was able to weather some lean months.

3. Invest in yourself. This may seem to run counter to the previous points, but it really isn’t. Any venture is only as good as the people running it. While professional development is a tempting line item to cut in the short term, it has negative implications for the long term. The world can be a very cruel place for people and organizations who are not current in their fields and most fields are changing rapidly. If you’re going to be successful, you’ve got to be the best “you” you can be.

4. Focus on your value proposition. In a climate where employees are being laid off, consultants make a mighty tempting target for cuts. The difference between being viewed as a luxury or as an indispensible part of the organization is demonstrating your value proposition. Being liked and respected is nice, but it’s not enough. This is equally true for organizations. You have to be clear about what your core competencies are and add value that significantly exceeds the investments you are asking for. Understand what you’re bringing to the table and communicate that consistently.

This list is not exhaustive, but these four lessons rise to the top when I reflect back on the last four years of running my own business. As the economy slowly recovers, I am happy to look at the Great Recession in the rear-view mirror. While I would have preferred not to go through those painful experiences, I have definitely learned from them. With a potential Fiscal Cliff looming, those lessons could come in handy again.