Plan ahead and survive the next economic recession which may just be round the corner
As Bob Dylan sang back in the turbulent Sixties, ‘The Times Are A-Changin” (1964). And now 62-years on the world is still a troubled place with the World Order crumbling in front of our eyes (writes Jim Masson ©).
Running a business has become difficult if not precarious as the world economy falters. Supply chains could collapse and fuel prices could rocket.
How can businesses in rural County Down prepare for what lies ahead ?
So, preparing for a serious economic recession requires businesses to focus on cash preservation, operational resilience, and strategic positioning and not sailing by the seat of your pants!
As the world is rapidly descending into global chaos and World War Three may just be approaching, how prepared are we in this corner of Europe for what lies ahead ?
Shop local may be the only option if the rest of the world is at war or even worse, does not exist as we know it !
Whilst the UK seems to be equivocating over commitment to the growing war in the Middle East, PM Keir Starmer is cautious as he is walking on poliitical eggshells and could embroil the UK in a war it is not well-equipped to fight.
And he is avoiding the stigma of the past Blair-Bush involvement in Iraq. As the UK economy struggles to make ends meet, and with Britain out of the European Union and in a volatile NATO with a defecting US role, the future looks certainly threatening and bleak.
Economic recession is a likely scenario. So if our sons and daughters are marched off to war as could existentially happen, how prepared are we in the business community to weather the on-coming hurricane as the old World Order collapses ?
We have to put our company thinking caps on and develop a means for action (strategy) in the scenarios that lie ahead.
We have learned a lot of the rise and fall of empires in history… the Roman author Pubilus Renatus penned the famous words in the 4th Century, “If you want peace, prepare for war”.
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Time To Get Your Ducks In A Row
The companies that survive recessions usually do three things well: protect cash, stay close to customers, and remain operationally disciplined. Below is a structured list of key pointers across major business areas.
I have covered quite a few business courses over the years, but here is a brief, useful summary (courtesy of Ai.)
1. Cash Flow & Financial Management
Cash is the single most important asset during a recession. ‘Cash is King.’ A poor cash flow can kill even even bigger businesses.
Key actions:
- Build a cash buffer (ideally 6–12 months of operating expenses).
- Stress-test finances using worst-case revenue scenarios (e.g., 30–50% drop).
- Reduce or delay non-essential capital expenditures.
- Renegotiate credit lines and debt terms while banks are still lending.
- Improve working capital management:
- Shorten customer payment cycles.
- Extend supplier payment terms where possible.
- Monitor cash flow weekly, not monthly.
- Consider additional investment but look at options and interest rates.
Important metric:
Focus on cash runway (months of survival without new revenue).
2. Cost Control & Efficiency
Recessions expose inefficiencies quickly so get to grips early on with these.
Priority cost actions:
- Identify non-core spending to cut immediately.
- Pause low ROI marketing or projects.
- Review outgoings for subscriptions, software, consultants, and vendors.
- Consolidate suppliers to negotiate better rates.
- Reduce fixed costs where possible (office space, equipment leases).
- release unused stock to generate cash.
But avoid cutting:
- Core product development
- Critical customer service
- Top-performing sales channels – cutting the wrong things can damage recovery eg price givaways can make it difficult to get back to pre-recession levels.
3. Revenue Protection & Customer Retention 🤝
Acquiring new customers becomes harder during recessions.
Focus on protecting existing customers:
- Strengthen customer relationships and communication.
- Offer flexible pricing or payment plans.
- Introduce lower-cost product tiers.
- Increase focus on customer retention metrics.
- Prioritize high-margin or recession-resistant products.
- keep on top of your debt collection.
Rule of thumb:
Retaining customers is 5–7x cheaper than acquiring new ones.
4. Workforce & Management Strategy
Leadership and team stability matter heavily in downturns and use evidence-based decision-making.
Management priorities:
- Communicate transparently with staff.
- Freeze hiring unless roles are essential.
- Cross-train employees to improve flexibility eg to multi-task but keep an eye on contractual side of staff arrangements on what is possible.
- Focus teams on revenue-generating activities.
If layoffs become necessary:
- Do them decisively and early, rather than multiple rounds.
- Ensure the legal boxes are ticked with contracts and exiting workers.
- Protect key talent.
Morale and clarity from leadership are critical.
5. Scenario Planning & Risk Management 📊
Uncertainty increases dramatically in recessions.
Prepare multiple scenarios:
- Mild downturn
- Severe recession
- Prolonged recession.
For each scenario determine:
- Revenue expectations
- Cost reduction triggers
- Staffing adjustments
- Financing needs
- Legal and H&S implications.
Update forecasts monthly or quarterly.
6. Supply Chain & Vendor Stability
Economic stress can break supply chains.
Actions:
- Identify critical suppliers and their financial health.
- Diversify suppliers where possible.
- Increase inventory for mission-critical components.
- Negotiate longer-term agreements with reliable vendors.
7. Strategic Opportunities
Recessions also create rare growth opportunities.
Well-prepared companies often:
- Acquire weaker competitors.
- Hire talented workers laid off elsewhere.
- Gain market share when competitors cut marketing too deeply.
- Invest in productivity improvements.
Many major companies grew during recessions (e.g., Airbnb, Uber, Microsoft expansions).
8. Pricing Strategy 💵
Pricing becomes sensitive during downturns.
Consider:
- Smaller packages or subscriptions.
- Value-focused messaging.
- Bundled offerings.
Avoid aggressive discounting that permanently damages brand value.
9. Operational Discipline
Run the business tighter than usual.
Implement:
- Weekly KPI reviews
- Sales pipeline tracking
- Cash flow dashboards
- Department spending approvals.
Focus on data-driven decision making.
10. Leadership Mindset
The biggest mistakes during recessions are panic or denial.
Effective leaders:
- Act early
- Stay realistic but optimistic
- Communicate constantly
- Maintain long-term thinking.
Recessions punish slow decisions.
✅ Simple recession survival framework
- Protect cash
- Cut non-essential costs
- Keep customers close
- Plan for multiple scenarios
- Look for opportunities competitors miss.
If you’d like, I can also give you:
- A recession preparation checklist used by CFOs
- The 12 financial ratios investors watch in downturns
- A “recession war plan” template businesses use internally.
What are KPI reviews ?
KPI (Key Performance Indicator) reviews are regular meetings where a business reviews its performance to track how well the company is performing against its goals.
A KPI review answers three main questions:
- How are we performing right now?
- Are we meeting our targets?
- What actions do we need to take next?
A KPI is a measurable number that shows how well a business is achieving a specific objective.
For example:
- Revenue growth
- Customer acquisition cost
- Website traffic
- Sales conversion rate
- Profit margin
- Customer churn rate.
(KPIs turn business performance into clear numbers that can be tracked over time that shows how a business is performing.)
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You may be doing some or all of this at the moment or plan to. Your leadership is critical to the survival of your business. You may blink and lose concentration in this fast moving business environment.
We came out of a Covid pandemic a couple of years ago, and could once again plunge back into a scenario where home working is again a reality for more workers as fuel costs escalate. There is still a lot of uncertainty about what is happening at a global level, but a good business person will be cognizant of all of this and hopefully weather the storm.
Most business people love a challenge. So you need to manage the changes that are now quickly unfolding, or, unfortunately, they will manage you, possibly with damaging and disastrous consequences.
So… proper planning prevents problems going forward!
