Elon Musk Isn’t Just Warning of a US Recession–He’s Using the Simple ‘PPP Strategy’ to Weather It

Elon Musk has been adamant that a recession is inevitable–and near, as many others from Bill Gates to Jamie Dimon have suggested. While others spin their wheels, Musk and his fellow luminaries are preparing for what’s to come. In doing so, they are gaining the traction they need to forge on through the incoming economic storm, and come out the other side unweathered.

The brilliance of their recession-proofing plan is an incredibly simple strategy that you can (and should) apply to all facets of your business. It upholds the core of Warren Buffett’s genius five-word success strategy–and there are no hotshot advisors or million-dollar investments required to benefit from it.

It’s the ‘PPP strategy’: Predict, Prepare, and Persevere.

1. Predict: Always Stay Multiple Moves Ahead

Recessions are a part of market cycles. So it’s not a matter of if but when the next will be–and it’s becoming increasingly difficult to ignore the writing on the wall. Between a plummeting market, record-high inflation, and a labor shortage, the signs all point in the same direction.

What economists know is that recessions are a lot like volcanoes: Trouble brews beneath the surface long before it erupts. According to Bankrate, there are six key indicators that a recession is coming. Those who predicted what was to come, are those who are able to properly prepare for it and live as if it’s already here long before it arrives. And this holds true whether it’s an economic crash or the successful pursuit of a new venture.

The ability to foresee and predict challenges in a market is how Uber built an $11 million business with a $0 marketing strategy. Or, how Netflix killed Blockbuster. Those who think in terms of what will be rather than what is are those who become–and stay–successful.

2. Prepare: Get Ready For What’s Ahead

It’s not enough to know what you will likely be up against, you have to also use that information to prepare for it. And ideally, not just prepare for if it happens, but operate as if it is already happening.

For example, Elon Musk recently announced layoffs at Tesla before calling the company’s factories “money furnaces.” This comes as a result of halted production at its Shanghai plant, which might also play a role in the decision to put a stop to Cybertruck orders outside of the US

In the case of preparing for a recession, here are a few key principles to follow:

  • Put big risks on pause
  • Cut back on superfluous spending
  • reduce costly overhead
  • Avoid high-interest debt (and interest in general, as much as possible)

It’s also the case for everyday business. Southwest Airlines provides an interesting example of what happens when a business has a solid grasp on market predictions but lacks preparation. Amid the pandemic, Southwest did what no other airline was doing–it expanded. The idea behind its expansion plan was brilliant. Yet it failed miserably, becoming America’s least reliable airline in a matter of months because it didn’t adequately prepare for it.

3. Persevere: Get Ahead

Economic survival is not solely achieved through good reactions but good planning and execution. The end result is generally the ability to persevere. So upon weathering a storm, repeat the ‘PPP’ strategy to stay ahead, or even to get further ahead.

If you start operating your business as if a recession is already underway, you will not feel the effects as deeply when it does strike. As a result, your company will not only weather the storm, but get ahead of their competitors who reacted to it rather than safeguarded themselves from it. It’s a lesson in mitigating risk and a key element in laying the foundation for success.

Ultimately, it’s the idea that the anecdote is not to fix problems, but to prevent problems–and it’s applicable whether you’re facing a recession or running a business.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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