No one is really talking about it yet outside of the financial planning circles, but it is not a secret: There is a Recession coming and it is going to sting because we have had it so good for so long!
How soon? How big? How long?
Good questions. Who knows? Q4 2017 to Q3 2018? Big enough to feel the pinch? Forecasters are all over the map on this subject, but most agree that a Recession is coming.
What matters right now is what you should be doing to prepare, which is not surprisingly what you should be doing all along: Run a fiscally sound business with a firm hand on the risk knob.
Show your balance sheet some love
This means lower your debt and keep your fingers out of retained earnings. This is your cushion against a long downturn.
A lack of retained earnings will devalue even a profitable company.
Fire up your marketing program
You want to keep leads flowing in. Plus, when the Recession hits, customers will change suppliers. Be the one they want.
Prepare to spend more on marketing not less.
Protect your best employees
These are the folks that are going to get you through this. Focus on long-term compensation and benefits. Pay attention to their quality of life.
Get rid of your under-performers. They will slow you down during recovery.
Minimize capital investment
This goes beyond avoiding debt. If you can rent something, don’t buy it. Shorten your expectations on ROI. A two-year payback is too long in an uncertain economic climate.
Be scalable. Don’t become dependent on revenue if revenue is going to be scarce.
Be unapologetically profitable
Of course, this is what allows you to practice the other four habits. Make profit a habit too. If your business is seasonal, focus on being profitable all year even if it reduces profits in “good” months.
React strategically to missed profit targets. Now is not the time to wait for things to “turn around”.
If you find that you don’t haven’t mastered the basics, it is not too late. Take a broad assessment of your business and start addressing the fundamentals now.
For guidance on where to start, schedule a an appointment and let’s get you pointed in the right direction.