Four Critical Adjustments Entrepreneurs And Company Leaders Need To Make In An Economic Slowdown

Four Critical Adjustments Entrepreneurs And Company Leaders Need To Make In An Economic Slowdown

Just when you thought the impact of the pandemic was over, here comes an economic slowdown that is being foreshadowed by high inflation and supply chain complexities. If you are running a startup or are working in an area of a company responsible for revenue, then you better get ready to make some quick adjustments to your overall strategy and potentially, the business model. Because if we do head into a recession, and you did not take the necessary steps to safeguard your company through this “storm”, then you will be facing real trouble just over the horizon.

For a lot of younger company leaders and entrepreneurs, this might be your first economic challenge, notwithstanding the pandemic. As such, you might not actually see the slowdown that is coming. But you need to look at the “dots” of information that are already surfacing. Inflation is high, supply chain issues, slowing vehicle sales, housing slowdown, large drop off in new mortgages, hiring freezes at major companies, layoffs in some industries and the overall effect on the stock market in terms of investor confidence. In addition, when you see large companies like Procter and Gamble pulling back on advertising media spending, according to an article by Adage, it’s like a “canary in the coal mine” warning that things might get worse before they get better. So what do you do first?

Talk to people who have been through three to four recessions and seek their wisdom and advice. They will probably tell you to get to work right now, actually you should have been working on this in early February of this year, and make the adjustments your company needs to survive and grow.


Here are some areas you need to focus on and make key decisions to ensure your companies health over the next year.

Manage your cash. Cashflow is the life blood of almost any business. Managing your cash whether it’s through a more aggressive accounts receivable effort, a negotiated payment schedule with vendors in your accounts payable, keeping employee costs in line with wage freezes and little hiring. It all matters right now as your primary goal should be to generate strong cash flow in the business.

Control your costs. Whether you are in a large company or you are a founder who raised $5 million in your latest round, you better really control your costs right now. For founders who are pre-profit, you need to extend your “runway” and make the money you raised go further, especially through an economic slowdown. If you are in a large company, you will be receiving an email, if you have not already received it, to manage your region, division, department costs through the rest of this year.

Small pivots matter. As you review your business strategy, business model and revenue projections, do not hesitate to make small decisions that can benefit you greatly. If you wait and assume things will get better, you might not be prepared or able to withstand a recession. Look at your business model and shift people and resources to areas that will produce or protect revenue. Maybe cut back on advertising media spend and use services like re-targeting, email marketing or better organic social media efforts in the near future.

Make your decisions well. While you will likely need to make some adjustments to your business in the foreseeable future, don’t make you decisions irrationally or quick just to make them. Seek the counsel of your board, advisors, mentors and others who have experienced economic uncertainty. Combine your hard data with trend projections that are honestly realistic. Likewise, don’t suffer from analysis paralysis or consensus group think. Get your data, your inputs from the leadership team, advice from advisers or mentors and then make a decision. Believe it or not, quite a few companies fail because they simply do nothing.


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