George Antoniadis has lots of memories of the Great Recession, but the most searing was this: when the business-aviation industry essentially was shamed as a social culprit as CEOs of Detroit automakers decided to drive to the federal-bailout proceedings in Washington, D.C., rather than take corporate jets.
As one of America’s leading fractional-jet-ownership outfits, PlaneSense took a punch to the gut from that exercise as well as, of course, the entire downturn of 2008 and 2009. But Antoniadis, who is founder, president and CEO of the Portsmouth, New Hampshire-based company, learned several lessons from the experience that he has both incorporated over the subsequent decade and has kept top of mind for any next downturn.
“If and when we arrive at this recession that everyone fears will come, my four takeaways for preparation are: Don’t run out of cash; keep the quality of your services or products better during the downturn than they were at the beginning of it; keep your tight team of people onboard; and keep planning on what you want the company to be on the other side of the tunnel.” And, fifth, he adds: be prudent in cost-cutting.
PlaneSense had been in business nearly 15 years when the last recession hit, with its vast cutbacks in corporate travel. And immediately, the company benefited from one philosophical practice that Antoniadis had used from the beginning: Don’t ever get greedy.
“Don’t stretch more than you need to,” he told Chief Executive. “I’m an entrepreneur, so I wouldn’t say that I don’t go for opportunities. But also, in my years of running this business, I’ve been careful with our growth. I’d rather have solid growth of X percent than wobbly growth of 25X percent. I want to be able to look back and say, ‘Yes, we grew, but not to the point where we were precarious.’
“You have to ask yourself: Is this growth that will put me in a place where we’ll be very vulnerable for a while? Are we appropriately using our resources? Do we have space in case something happens? Somebody once said to me, ‘Do you want to eat well? Or do you want to sleep well?’ You just want to make sure that you don’t regret the moment after you’ve made that next growth spurt you regret having done it.”
Nowadays, Antoniadis is applying his five criteria to navigating a course for PlaneSense as fears of a downturn multiply.
“First, you’ve got to know that cash is king; and in the end, that’s what counts,” he said. “So even in the darkest of circumstances, you need to make sure you have enough cash. That’s the only thing that counts in survival mode.”
At the same time, Antoniadis said, his second action point might seem contradictory to the first, “but it’s actually not. As you go into crisis it’s imperative to maintain or improve your product. Competitors will start trying to cut costs, and in doing so will diminish their output, whatever that is. In our [industry], it’s service. So there’s a fantastic opportunity to shine within your group.”
Point three is “also cardinally important,” he said. “If you go into a downturn, maintaining the stability and camaraderie and enthusiasm of your team is hugely important, because that – along with maintaining or improving your product – is what’s going to make you stronger on the other side.”
Another part of Antoniadis’s approach in 2008 and 2009 and, if necessary, today is what he called “intelligent cost optimizing.” He said CEOs shouldn’t conduct “rampant cost cutting” but rather trim expenses and at the same time even invest more resources in difference-making areas such as marketing.
To support such aims in 2009, for example, PlaneSense made its biggest compensation cuts in the C-suite. “You have to lead by example, and that’s the most powerful example you can set: a dramatic cut in pay,” Antoniadis said. “The reduction in pay for a very highly compensated team member is potentially less painful for the reduced person and has much more impact than a similar cut on someone lower down the scale. To cut an equal percentage across the company is unfair—and you’re having to impact a lot more people to accomplish the [financial] result. So we had a graduated percentage of reduction” that rose by compensation amount.
During the Great Recession, Antoniadis also tried to ensure that he was positioning PlaneSense to come flying out of the downturn. One thing he did was “carefully evaluate all of our team members and instead of hierarchically furloughing people, we tried to [weed out] the under-performers instead.”