With inflation still high and the Fed pushing rates higher, talks of whether or not the world is headed into recession continue to persist. While a potential recession is concerning, it’s not all doom and gloom. Economic downturns provide opportunities to level up: finance smarter, do more with software and technology vendors, expand business development, and ultimately prepare for an economic rebound. There will be a bounce back and it’s crucial to be prepared for it.
Times like these feel extremely uncertain, but as a CFO, it’s important to help employees and peers understand this is a periodic, cyclical event, and the good times will come again. To catch the rebound, business leaders can focus on four key tactics.
1. Never Lose Sight of the Customer
As a business, customers should always be at the top of your priority list. If you're not relevant to your customer, there is no business.
Customer experience is the new marketing battlefront. Encouraging finance professionals to spend time with customer service teams helps build knowledge of what’s causing gripes and churn. When investing in areas you think will drive better outcomes for the company, always map back to better outcomes for your customers.
Investing in customer service is easier if you know what they are experiencing. Stay close to feedback received and make sure that even when you have to scrutinize every dollar you spend, you’re thinking about the impact on the customer.
2. Prioritize Fiercely
In times of economic boom, companies could go after almost every opportunity because even if they burned through cash, they had the option to raise more. Today's world is not like that.
Preparing for the bounce back after a recession means being extremely disciplined towards what areas will drive the most impactful outcome. Ask yourself, what will truly move the needle? Are there areas that are nice to have, but are never going to make an impact? Encourage fierce, fierce prioritization.
3. Regularly Communicate
As layoffs continue to make headlines, employees are feeling insecure. When things are changing and businesses are transforming is when your people need to hear from you most.
In uncertain times, interactions with employees are mission-critical. If you used to hold a town hall once a quarter, do it once a month. If you host your team meeting once a month, do it once a week. Right now, you need to communicate, communicate, communicate.
4. Preserve Cash Flow
Cash flow takes overriding importance when liquidity is harder to come by. If there's an opportunity to raise money or scale back spending in certain areas that won't move the dial, always look to preserve cash flow.
You don't know when and how long liquidity windows will stay open, so err on the side of caution. This tactic, coined “cash is king,” adds flexibility and more breathing room to help push through tough times.
For younger companies that don't have access to capital markets, raise cash when you don't need it, not when you're staring down the barrel of wondering how you'll make payroll. Make those decisions early to avoid that situation entirely.
While you can never fully predict the impact of periods of economic downturn, it’s crucial to be as prepared as possible. The silver lining of a highly talked about recession is it won’t take anyone by surprise, use these tactics to come out stronger on the other side.