Listen instead on your Monday Morning Drive:

A recession, or worse, is likely. Our current economic policies mirror those that led to past financial crises, and historical records indicate that these approaches rarely succeed.

You can’t control government policy, but you can prepare your business. Here’s how to protect yourself when economic challenges arise.

Watch for Early Warning Signs

Pay attention to your sales pipeline, especially:

• Sales inquiries declining
• Jobs scaling back or canceling
• Projects put on hold
• Customers asking to postpone meetings

These indicators suggest market softness. The marketplace is signaling uncertainty, which will impact your supply chain.

Take a Hard Look at Your Business

This isn’t the time to add headcount. Instead, evaluate your current team and costs:

1. Identify expenses you can’t avoid
2. Determine the minimum staff you need to operate
3. Separate necessities from luxuries
4. Compare the cost-benefit of staff versus a part-time supply chain

Cash Flow Projections Are Back

Before worrying about revenue, focus on cash flow. Dust off those spreadsheets you created during the pandemic (contact me if you need one).

Calculate when you’ll run out of money if revenue dips. Include:

• Current payables
• Variable supply chain costs
• Overhead expenses

Rethink Your Break-Even Revenue

Your past monthly break-even analysis is less important than your current overall cash flow projection. Your goal is to achieve a neutral cash flow over a longer period.

In a stressful economy, both revenue and gross profit percentages will decrease. If your normal gross profit is 55% of revenue, recalculate assuming it might drop to 45%. This gives you a more realistic break-even target.

With this analysis, you’ll know exactly how much revenue you need to keep your doors open, stay financially healthy, make payroll, and pay essential bills.

Communication Is Key

Communication matters. Ask your customers how economic conditions are affecting their business, industry, and decisions.

Let them know you have solutions. During past economic challenges, we developed tools for economic meetings with strong communication and effective content delivery. Your customers still need meetings and messaging, but they’ll need to reduce costs.

This way, your value proposition shifts to helping clients communicate effectively with less travel and hotel expenses. Virtual options become more attractive again.

Consider a Return to Streaming

Streaming margins are high. If 50% of your revenue comes from streaming services, you may be able to maintain much of your overhead, as direct costs are lower.

Dust off those old platforms. It’s always helpful to refresh your existing tools.

Be Part of the Solution

Unlike the pandemic, government subsidies are unlikely to help with economic policy challenges. This time, we’re on our own.

Success requires:

• Balanced overhead
• Knowing how to generate gross profit
• Scalability
• Effective outsourcing
• A strong supply chain
• Flexibility between in-person and virtual solutions

Start having strategic conversations with customers now. Understand their economic constraints and offer alternatives.

The Show Always Goes On

We will survive. The show always continues, even if it takes a different form.

Companies built on balance and scalability will survive these economic conditions. It’s never too late to start building these foundations.

If you need help sorting out your situation, reach out. A survivable, profitable model exists for every balanced company in every economic climate.