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Don't Make This Common Mistake When It Comes to Your Business's Post-Covid Recovery

When the stakes are high, business leaders have two choices: Kick into survival mode and go full-on "fight or flight" or look beyond the crisis and plan for the recovery.

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Humans are innately designed to assess a situation and react based on our accumulated knowledge. When the stakes are high — such as critical financial or health matters — our "fight or flight" instinct, sparked by our sympathetic nervous system, kicks in and can take over our decision-making processes. In essence, it's our built-in survival mechanism to overcome "stressful and life-threatening situations," according to this recent Cleveland Clinic report. In this state, we become fully immersed in the current situation, and although our senses heighten to handle the perceived , the fight or flight instinct often blinds us from assessing beyond the immediate circumstance.

In business, like life, the fight or flight instinct can seize control of our actions. The pandemic serves as a perfect example: The last year was a tumultuous ride for businesses, with many industries seeing their revenue sharply decline with no warning and little insight into the future. 

In such a scenario, business leaders have two choices: Kick into survival mode and go full-on "fight or flight" or look beyond the crisis and plan for the recovery. Experienced leaders tackle the entry into the downturn (making sure you thoroughly prepare) and, perhaps more importantly, focus on how to capture market share during the inevitable upturn and recovery.

Related: How Clean Energy Jobs Can Drive Covid Recovery

Don't fail to plan for eventual recovery

I learned this the hard way with my previous business,, post-9/11. Our failure did not involve the lack of a sustainable business going into the downturn, but instead a failure to prioritize cash on hand. The funding we raised prior to the downturn — and ultimately burned through — prevented us from raising additional rounds once the recovery set in. Investors didn't see the ability to recoup their previous or any future investment, so the business was no longer deemed a worthwhile opportunity. It was a clear example of failing to plan ahead for the eventual recovery and the needs of the business once that recovery set in.

Because, in fact, the recovery always comes. While it may not seem apparent in the midst of a crisis, it will appear at some point. If ill-prepared for that recovery, the "survival" work can ultimately fail as well. Many companies, when faced with a downturn, overly focus on the entry into the downturn and survival tactics such as hiring freezes, cutting back existing headcount and layoffs, pay cuts and exiting certain markets. Reactions like these are designed to preserve cash for the company to endure the downturn.

Not surprisingly, focusing entirely on such measures can in fact adversely impact a return to "normalcy." As summarized in this 2003 Harvard Business Review article, impulsive, flight-response moves do not "energize" employees, whereas pragmatic initiatives, or "small wins," mark the brand of leadership that invariably prepares companies for the upturn with a culture of positivity.  

In other words, giving into this instinct tends to create a chain reaction, where negativity is more likely to reverberate throughout the entire enterprise. Alternatively, those who offer calculated and measured steps provide leadership that breeds future success even during the most tumultuous of times.

Related: 4 Strategies to Help Your Business Recover From Coronavirus

Forward-thinking moves set you up for success

Take Microsoft CEO Satya Nadella, for example. Nadella guided one of the world's most iconic companies through the Covid-19 crisis with unabashed positivity, never losing sight of that fabled light at the end of the tunnel. His focus was intentionally placed on navigating the pandemic and adopting a growth mindset, purposefully discarding blame for current circumstances. Nadella's philosophy permeated management and filtered throughout the organization, resulting in "Broad-Based Growth Across All Segments," according to industry analysts, heading into the post-Covid recovery.

Fight or flight (or freeze) crises boil down to opportunities — opportunities to learn, improve, grow and achieve higher levels of leadership. Those who panic naturally miss out on these golden opportunities; those who embrace them increase their odds of emerging from the crises stronger. 

This lesson came in handy last year. At PubMatic, we assessed the crisis and anticipated the recovery, compelling us to make contrarian moves with an eye to future success. For example, anticipating rapid digital growth from Covid-driven behavioral shifts (dramatic increase in online activity for banking, fitness, work from home, school from home, etc.) we increased investment in our ad-serving capacity. We ramped up investment in connected TV and digital video, hired engineers to build products for the future, reduced our office footprint and reinvested in home-office expense reimbursement and Wifi subsidies — all forward-thinking moves in anticipation of the eventual upturn. 

The challenge with crises is that they're often unpredictable. That's precisely why leaders must prepare for a bust even in boom times and vice versa. As a result of our focusing positively on how to exit, rather than obsessing on our entry to the downturn, we have gained market share every quarter since the outset of the pandemic.

Related: What Local Business Owners Are Doing to Recover From the Covid-19 Tsunami

Crisis and economic downturns can feel overwhelming and all-consuming. However, failure to address the inevitable recovery can put all survival-mode efforts at risk. Draconian measures such as pay cuts and layoffs may solve problems in the interim, but they may also position the business poorly when boom times reappear. 

Instead, consider saving money wherever possible, rather than cutting costs by eliminating projects and positions. Opportunities always exist to renegotiate vendor contracts, reduce open headcount, stop certain marketing activities or defer non-essential capex. Consider how the world will be different in the future, and invest energy and resources into capturing market share based on that assessment.

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