Do you wish you had a crystal ball to predict whether your business will sink or swim in a recession? While we can’t know what’s ahead, we can plan ahead to avoid three business-killing scenarios detailed in this article.

In stormy economic tides, it’s easy for a company to get swept away and under. When a company loses its bearings, it is difficult to get back to shore safely.

When economic conditions become unstable, we see three things happen to businesses that are unprepared:

  • Those who are barely afloat and make just enough profit to keep their doors open will sink
  • Those treading water who are just above the break-even line will drown
  • Those without a fixed compass, or undefined goal or vision, get confused and lose their connection to their primary customer demographic

To avoid these effects, it is important to prepare ahead of time for the eventuality of downward market cycles.

Use Key Performance Indicators to Find Negative Trends 

Business owners who employ simple, easy-to-read tools for testing and evaluating performance are in a stronger and more informed position.

One of these tools is the use of Key Performance Indicators or KPIs.

KPIs are important because they are metrics of your business that you can act upon and proactively change. Examples of KPIs include: how many calls to make in an hour, how many leads are coming from each marketing and sales activity, and how many clients your team brings in.

Tracking how many customers you have is not a KPI – it is a result, not a driver of your business.

The most important KPIs to implement include average dollars per sale, profit margins, and the number of times clients buy from you. Your future actions will be tied back to these indicators, which will keep you completely informed of trends happening in your business at any point of the year.

The sooner you identify these trends and quickly adjust and adapt to changes, the more you will obtain a tactical and strategic advantage over your less-informed competitors.

Discover Financial Trends in Your Business that Can Magnify in Recessions

Many business owners wait way too late to get a handling of their finances.

What many of them find is that they wasted too much money in certain areas, did not save enough in reserves, and did not make enough to sustain them through the hard times,.

If they dove into the number sooner, they would see when profits begin to drift downward and then can realign their focus in a more precise and accurate manner, allowing them to get back on track to profitability.

When a recession happens, they are better equipped and can bolster their finances a bit easier. (Morgan Stanley)

Those who do not respond proactively to changes are at risk of not only wasting time and money but also losing their valuable customer base and overall brand integrity

Is your business on a steady course or at risk of sinking into unpredicted economic downturns?

Talk to a business coach to help you uncover the areas in your business that are most vulnerable. Visit our website at to get connected.