Take Action Now to Prepare Your Company for the Next Economic Downturn

Is your company ready for the next economic downturn?

If you’re not, now’s the time to take action.

Researchers, forecasters, and pundits alike are sounding the warning bell that an economic downturn is on the horizon. Though it’s not time for panic, it is time to be alert. Capital One Financial and Discover Financial Services recently suggested the card industry has moved into a new stage of preparation for the eventual end of the nation’s decade-old economic expansion.

And it could happen as soon as next year. Nearly half of chief financial officers in the United States are predicting the American economy will be in recession by the middle of next year, according to a new Duke University/CFO Global Business Outlook survey. And 69% of those executives are bracing for a recession by the end of 2020.

To survive an economic downturn, you need to have a solid plan in place to minimize possible — and probable — financial impacts to your company. At its core, a well-built plan helps combat short-sighted decision making, which is often a result of the additional financial and operational pressures an economic downturn can fuel.

A well-developed and well-executed playbook can position your company to not only withstand the downturn, but help you capitalize on targeted opportunities to accelerate your growth amidst market and industry changes. Whether you’re in financial services, insurance, health care or another industry, it’s essential to have a playbook to rely on when the going gets tough.

To start creating your own playbook and take action now to prepare for the next economic downturn, here are our top tips:

Top Tips to Prepare for the Next Economic Downturn

IDENTIFY ALL KEY STAKEHOLDERS

An economic downturn will have impacts on everything from IT and Finance to Legal, Compliance, Human Resources, Customer Service, and more. Make sure your plan has inputs from all stakeholders responsible for decision making, driving strategy and, ultimately, implementing change. In an actual downturn, you don’t want to be in a position to rely on siloed decisions, so make sure everyone is aligned and on the same page, and all areas are considered — whether the impacts will be direct or indirect. Who should be at the table? There’s no one magic formula because your group of stakeholders will vary by the type, size, and maturity of your organization.

IDENTIFY ACTIONS TO REDUCE RISK AND PROTECT YOUR FINANCIAL STRENGTH

To prepare for an economic downturn, you need to ensure you’re considering all possible future scenarios, as well as make a commitment to keep an eye on developments that could foreshadow change. Where are you seeing performance variations, and where might you see them in an economic downturn? Where do you have the most risk, and how would that be impacted in a downturn? How are customer behaviors shifting now, and what would be different in a downturn? To position your company for the most successful outcomes in an economic downturn — whether that’s minimizing risk, stabilizing your bottom line, or leveraging opportunities to advance — your playbook needs to take a deep dive into the here-and-now as well as the what-might-be.

IDENTIFY KEY METRICS TO MONITOR

You can’t monitor what you’re not measuring. What areas comprise your barometer for change? A well-developed playbook will detail pre-warning indicators that will alert you to possible issues — allowing you to take action to address what’s developing, sooner rather than later. Is it macro-level changes in your industry that have large-scale impacts on your customers and peers? Or is it micro-level changes within your own company that indicate situations are idiosyncratic to you alone? In the crisis of an economic downturn, lack of information and an overload of emotions are a high-risk combination. Empower your decision making with real-world data and analytics that creates and supports your framework of action.

DEVELOP MITIGATION STRATEGIES

This is where the rubber hits the road in your playbook to prepare your company for the next economic downturn. It’s the answer to the question: Now what? Will you expand or restrict? Will you increase or decrease? Will you start or stop? Will you speed up or slow down? Will you build up or scale back? And how will your actions impact your company, your staff, your brand, your reputation, your customers, your competitors, and your industry? Create tested strategies that are ready on the shelf to take down when you need them — and when you need them to work. By being prepared, you’ll save yourself valuable time in the execution. And you’ll save so much more.

Some companies flourish in an economic downturn. Some unfortunately don’t. With a well-developed, well-executed plan, you’ll stack the odds in your favor that you’ll be one that does.

If you’re not sure how to start your plan to prepare for an economic downturn, or how to get it across the finish line, Spinnaker can help. We’re experts at what you do. We know what it’s like to sit in your chair, because we’ve spent most of our career doing just that. Our Spinnaker team is made up of seasoned industry experts with decades of proven experience running and managing businesses just like yours. At Spinnaker, there’s no such thing as a “career consultant” in our ranks, just hardworking management-level individuals with deep first-hand knowledge of your business challenges. To find out more, connect with us today.