To save money and to maintain good weather, the Economic headwinds affect many businesses across the globe the Even board members resort to massive layoffs. 

Amazon will let go over 18,000 employees around the world the This month in the world and at Goldman Sachs, where job losses will affect around 6.5% of their workforce, started last week.

These mark the The largest layoffs in Amazon’s history and at Goldman Sachs’ since the financial crisis.

But there are good statistics to support this assertion that there is more to surviving a recession than cuts – and actually now might be the Time to seize market share and invest in the business. 

McKinsey analyzed around 1200 public records companies in the U.S.A. & Europe during the Great Recession (2007–11) and the Peak of the coronavirus pandemic (2020–21) and found that the companies that had the best shareholder return These were the times when the Ones that did three thingsThey improved their margins and decreased financial leverage. And they did it perfectly. the Economy hits rock bottom 

One lesson: Increase margins when economies fall into recession

McKinsey’s research shows that Leaders who were able to increase their revenues or improve their margins early in a recession had better results across all sectors. shareholder return Through the They are better at predicting the future economic cycles than their counterparts. Margin boosting is key. companies You can save even more capital.

“Strong margins help a company ease through macro headwinds; many companies achieve margin strength by improving operating efficiency through upskilling and digital innovation that increases frontline productivity,” the Report.

The key It is that Margin improvement It is best to start early These results were even greater in Performance is better than revenue growth in the early stages did. In the meantime, companies that Led in revenue growth but lagged behind peers on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin performance didn’t come out of either recession on top.

The Study continues that Leaders must consider both short- and long-term growth possibilities. “timely jolts”.

Lektion two: Optionality in the The balance sheet key

The history has proven this. that Companies that Do the Little things To increase retained earnings, to improve working capital and to lower debt, outperform others that don’t.

Optionality in the balance sheet—a combination of growth in Retained earnings and improvements in On the one hand there is working capital and on the other, there is a reduction in financial leverage, on the other—is particularly helpful going into and coming out of a period of constrained credit.

These were less relevant during the Last economic recession in 2020 was a low interest rate year. Building optionality was available during this time. the 2007-2008 financial crash – when interest rates were comparably high to today – was key You are the key to your success

Likewise, companies Refinancing debt can result in significantly higher costs than expected did in the past, due to rising interest rates. Their financial leverage must be reduced and they should reinvest. in There are new ways to increase productivity and growth. “pursue accretive M&A as the economy begins to rebound” You will outperform the competition 

“Companies with deep and flexible balance sheets not only have better protection against the risks of economic slowdown but also have reserve funds to pursue the valuable growth opportunities that the recovery phase of a recession brings,” the Report adds.

Lesson threeThe balance and timing of your actions are key. key

Balanced growth and margin improvement are key components of a company’s strategy.

Businesses seem to be doing well. that were in the Top 20-40% on All three They outperformed dimensions that He excelled in one dimension, but fell short of the others. the Bottom 60% in all other areas. A balanced performance in all areas. three A superior performance in all factors elicited better returns than a single factor.

They acted proactively and not reactively, which is perhaps the most important thing.

Companies that Got their ducks in A row in a row the When the economy was at its lowest point, people could still use their money the Strength of their balance sheets for investing in the This includes acquiring businesses and staff. 

Industries are indeed that People who are more cash-rich and have longer investment goals are likely to be better placed. Overall, however the Strategie to improve growth and maximize margins in It has been shown across all sectors that it is better to plan ahead than make last-minute, drastic cuts. 

McKinsey puts it. in Its report: “It’s clear that moving early in the recovery cycle brings outsize rewards.”

How to build trust and navigate it in Your business will benefit from The Trust Factor is a weekly newsletter that examines what leaders must do to be successful. Register here