To Deal with Recession, the Right Strategy is Being Proactive than Reactive

Mr. Masood Khan, CEO, Image Star Print Solutions Pvt Ltd (Brand: Image King)

In the past two decades, India has witnessed rapid technological changes and high economic growth despite occasional dips in the growth rate. Even at the global level, economic growth has been above the forecast levels with worldwide improvement in the standards of life. On the other hand, we have also seen major recessional events like Covid pandemic which brought the economic and social life to a standstill, but finally we got over that.

However, for the last one year, the world is experiencing another spell of recession; most major economies are facing the heat resulting in job losses, negative growth in exports due to undesired the undesired Ukraine-Russia war.  

Despite the troubles, India has the history of surviving all the disasters. Today, India is the 5th major economy, and continues to be one of the fastest growing economies in the world. By 2030, India is all set to become the 4th largest economy. India’s GST collections have touched a record Rs. 1.80 lakh crores, and the number of income tax payers and the total income tax collections have been steadily growing upwards.

Although temporary, as per the forecast, the current recession will persist for one to two years to come. What we see is, during the recession, big companies and traders grow even bigger, and the smaller companies and traders grow smaller; many of them even vanish unable to face the competition and bear the shrinking margins.

My advice to the partners under these conditions is that they should tie-up only with a few reputed and supportive brands that have strong supply chains, offer decent margins, and support during recessionary trends.  Then maintaining appropriate levels of inventory is another crucial factor to focus on. It is advisable to keep stocks of a few reputed brands so that they can avoid stocking too many products and over-stocking. With the right levels of inventories, it will be easier to park funds and maintain predictable and consistent cash flows. It is well-known that during the times of recession, most businesses get cash-strapped and unable to run. During recessions, it is imperative that one should identify and sell out slow moving stocks, if necessary, by giving high discounts. In other words, the dead stocks with little commercial value should be gotten rid of as early as possible.

If you want to survive, grow and be successful, prepare for the rainy days. We should be proactive than reactive— means predict the future trends and prepare in advance rather than reacting with panic when disaster strikes.

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