Recession Survival Guide: Remember L.I.K.E. as You Plan for an Economic Slowdown

Updated: December 18, 2024

Depending on which economic forecaster you’re listening to, a recession or economic slowdown in the U.S. is probably likely sometime this year. Therefore, now is the time to start planning for how your company will prepare for whatever economic conditions arise.

Consero recently spoke with Kurt Ostermiller, an executive coach who specializes in working with CFOs and CEOs, about how executives can best prepare their companies for a recession or economic slowdown. Ostermiller was interviewed by Consero’s Bridget Howard in the “Beer with a CFO” video series where he stated, “It’s important to recognize that recessions are part of the normal business cycle.” “Many fortunes have been made during recessions, but you have to prepare ahead of time for how your company will weather the storm.”

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Ostermiller uses the acronym L.I.K.E to describe how he believes CFOs and CEOs should prepare for recession. This stands for Leadership, Internal, King and External.

Leadership: Projecting a Positive Mindset

Ostermiller quotes leadership guru John Maxwell, who said that everything rises and falls on leadership. “Entering a recession or economic slowdown, employees look to the C-suite for leadership and direction,” he said. “The CEO and CFO need to project a positive mindset and an attitude that the company is going to make it through no matter what so this attitude can cascade throughout the organization.”

You’re probably familiar with the concept of “fight or flight” in which people either fight or run away when facing threatening circumstances. Ostermiller says there’s one more option that’s worse than either: inaction or freezing up and doing nothing. “Leaders can’t become paralyzed during times like this,” he said. “You have to be decisive and then make adjustments to your strategy as circumstances dictate.”

Or another way to put it: Act decisively even if you have imperfect information. “Face the facts with no denial, devise a strategy and move forward,” said Ostermiller.

Internal: Communication is Critical

Internal communication between leadership and staff is absolutely critical during recessionary times. “So is communication between the CEO and the CFO,” said Ostermiller. “This is actually one of the biggest problems I see at companies. The CEO and CFO must be aligned with each other and present a united message to the rest of the company.”

The board of directors is also part of the internal audience. “Most boards operate ‘noses in and fingers out,’” said Ostermiller. “But during times like this, boards need to be accessible and maybe a little more hands-on.” He recommends that businesses create a dedicated communication portal for board members to enable instant communication between them and executives. “Events are going to happen quickly and decisions have to be made fast,” he said.

King: As in Cash

Having a strong cash flow is always important, but it’s absolutely crucial during a recession. “We all know that Cash is King,” said Ostermiller. “Cash flow is vital to ensuring the survival of a business during recessionary times. You need to extend the runway and reduce the burn rate through cash flow analysis, rolling forecasts and scenario building.”

Ostermiller cautions against making cost cuts that could harm employee morale, like cancelling Christmas parties or employee lunches. “How much money do cuts like these really save in comparison to the damage to employee morale?” he said.

External: Customers and Supply Chains

There are two external audiences that CEOs and CFOs should pay especially close attention to during recessionary times. The first, obviously, is customers. “This is the perfect time to get out and visit your customers and talk about what’s going on in their business,” said Ostermiller.

The good news is that video technology like Zoom makes meeting with customers fast and easy now. “You can meet with customers all over the world in a matter of hours without leaving your office,” said Ostermiller. “Take advantage of this technology to have honest conversations with customers about their cash flow, markets and other aspects of their business.”

The second is supply chains. “You need to identify any potential risks in your supply chains,” said Ostermiller. “Everybody is going to buckle down during a recession so you don’t want to end up getting stuck in the middle.”

Harness Technology, Including FaaS

Ostermiller also stressed the importance of harnessing technology during recessionary times to speed up the flow of information and allow data to be shared in real time. This includes using Finances as a Service, or FaaS, to outsource the CFO and/or finance and accounting function.

Consero offers Finance as a Service for middle-market businesses across a wide range of industries. To learn more about how FaaS can help your company prepare for a recession or economic slowdown, visit us online and where you can schedule a complimentary introduction and consultation.

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