Worries have been growing lately of a possible recession on the horizon. With inflation still high and interest rates rising fast, experts have warned that an economic slowdown could be looming on the horizon for 2023. Is your organization ready?
It’s an important question. In the 2008 recession, 1.8 million small businesses were unable to make it safely through the downturn. How you prepare for the upcoming challenges could determine whether your company can survive.
It’s like seeing a hurricane coming on a weather report. You need to batten down the hatches, prepare as best you can, and hope the worst of the storm misses you. But what specifically can you do? Here are some steps your organization can take to save for a potential recession in 2023:
Preparing for a Potential Recession This Year
Start Planning as Early as Possible
Don’t let a recession take you by surprise. As much as possible, begin your planning process early. This will help you avoid the need to take drastic action if your sales suddenly drop.
This doesn’t just represent good advice under the current economic situation. You should also make it a general policy. Install a contingency planning process as a central component of your overall routine.
Why does this represent a good long-term strategy? Well, this time around, experts are predicting a potential slowdown well ahead of time. However, some economic downturns come with fewer warnings (the 2008 Financial Crisis provides a key example). To stay ready for these situations, have your “break in case of emergency” ready.
Concentrate on Cash Flow
Cash is king during an economic downturn. This could be especially true in this case when aggressively rising interest rates have contributed significantly to the recessionary danger. The higher costs of borrowing could make it difficult to access loans in a crisis.
As such, focus on maintaining a strong cash flow in the choppy months ahead. Here are a few steps to keep in mind:
- Control Expenses: Keep your organization as lean as possible. Be judicious about any expansion efforts and look for productivity enhancements.
- Build an Emergency Fund: Ahead of a potential downturn, create as much cushion as possible. Having cash in an emergency fund will give you flexibility as things get tight.
- Have Funding Options: Arrange potential funding options ahead of any potential emergency. This includes possible loans and lines of credit.
During difficult economic times, it’s important to keep your options open. The market will evolve in unpredictable ways. You want to be able to respond to any changes.
This doesn’t just mean preparing for potential challenges. Downturns come with opportunities as well.
Competitors go out of business or start searching for partnerships. Unexpected talent suddenly becomes available. Customer tastes can change dramatically. You should be ready to swerve in whatever direction gives you the best chance to capitalize on the situation.
Communicate with Your Key Stakeholders
Surviving, and even thriving, during a potential downturn will require a group effort. You’ll need the support of those around you. To that end, you should rally your key stakeholders behind the effort to face the difficult economic times.
Achieve this goal by having a first-rate communication strategy. Keep constructive conversations going with:
Understand how a recession is impacting each of these groups. At the same time, be aware of their challenges and fears. As part of the process, let them know how you are faring. This will keep everyone in the loop and give you as much flexibility and support as possible.
Looking to Add The Best Talent for Your Organization?
Weathering a recession gets easier when you have the right core team in place. A top recruiter, like ABLE Associates, can help you find the talent you need to succeed in any environment.
Contact ABLE today to upgrade your team-building process.