1. Be as upbeat as possible, both as a consumer and as a business person. The more we talk about a recession, the more likely it is to become reality. So try to behave as you would normally. I’m not sure whether the world was heading into a recession before 11 September, but there is no doubt that the events of that day had a significant impact on the US economy, and that is probably enough to have an effect on the rest of the world. The problem is not a systemic one, but when people are preoccupied with tragic events they stop spending, and that is bad for the economy.
2. Don’t stop advertising. All too often, executives see cutting the advertising budget as the easy option because it can be enacted overnight. But this is the time to capture the hearts and minds of consumers. Robust businesses increase advertising in a recession.
3. If you are in a consumer business, try to be as recession-proof as possible. I believe that if you offer a product of acceptable quality at a good price, consumers will buy it. They always want to save money, and in a recession, while you lose some discretionary custom, you will pick up business that cascades down from more expensive providers. More affluent people trade down because this is not a time to be wasteful, and businesses say: “Instead of going by British Airways business class, we’ll start flying on easyJet.” Our airline continues to be very busy. We have load factors on our planes in excess of 80 per cent at the moment, and 90 per cent of our rental cars are on the road at any one time. The internet cafes will probably pick up business because people may postpone the purchase of a computer and decide instead to pop into an internet cafe to read their e-mails. I am in a fortunate position, but it is by design.
4. If your business is a cyclical one, reduce volatility by taking as much hedge as possible (ie, making long-term contracts). My shipping line is a classic cyclical business. We transport oil: when the economy is buoyant, you transport more oil, and when it’s less buoyant, you transport less, and make less money. So I’ve taken as much hedge as possible, which means taking forward contracts for three or five years.
5. If you are a small but efficient business, look for the opportunity to leapfrog your larger competitor. The pressure on larger companies is greater because they have higher costs. You should see recession as an opportunity.
6. If you are running a listed company, be open and upfront with your investors. Investors are risk-averse. If they don’t hear what is going on, they fear the worst. Communicating with them is even more important in a recession. At easyJet, our stock price on 10 September was £4. After 11 September, we issued a trading statement, but not until the price had fallen to £2.25, so we had really taken a beating. After our statement, the price recovered and is currently about £3.50.
7. Save money by general good housekeeping. Persuade your staff that every time they spend company money, they should do so as if it were their own.
8. This is a good time to go back to your suppliers to negotiate a better deal. At easyJet, we are entering negotiations with Boeing to buy planes when other airlines are cancelling orders. If your supplier is feeling the pinch, offer to keep up your volumes if they reduce the price. Look for a bargain.
9. Think twice about launching a new business if it’s at the luxury end of the market. This is not the time to try to persuade people to buy £1,000 suits or £100,000 cars. People are looking for bargains. Postpone your plans until the economy is booming again.
10. Whatever you do, don’t cancel the Christmas party. In one of my companies, the internet cafes, there have been well-publicised financial difficulties. I had to put in more money and, unfortunately, make some redundancies. We had to bring the company back into the incubator, easyGroup. I felt it was important to celebrate our successes and we organised a “Welcome Home” party, to keep up staff morale. Whatever successes you have, celebrate them.
Stelios Haji-Ioannou is chairman of easyGroup. He was recently named Young Entrepreneur of the Year