Managing Through Economic Uncertainty
Three years since the beginning of a global pandemic and it is safe to say that we all are accustomed to some uncertainty. Simply put, uncertainty is when the outlook of any given situation is unpredictable; and it comes with a fair amount of agony. 2023 will have its share.
This is the year many economists have been predicting a recession in the US and other countries around the world. While not an overly speculative prediction given the direction the Fed has taken interest rates, and the downward forecasts from industries that saw significant increases through the pandemic; it is complicated because it comes with mixed economic signals, specifically around labor markets. For business owners, the situation is tricky. Gambling on one outcome over the other is itself risky, while preparing for every possibility is a waste of valuable resources and just not feasible.
Monitor Your Key Value Indications
It is in times of great uncertainty that we at Tullius Partners like to repeat our motto, “while always being prepared for an exit, run your business as if you will own it forever.” To begin with, closely monitor your Key Value Indicators. Today it is critical to know customer behaviors and current employee-related issues. Regarding customers, what are revenue trends and changes in revenue breakout telling you? How do these categories compare to prior years? Costs of Revenue over the last years have swung wildly. Where can stabilization be found and monetized? Labor performance, culture, and costs also continue to change significantly. What have you found that is successful at managing these changes in the past? What do other businesses in your area do? What about your competitors? While not a time to get caught up in too much analysis, your company and surrounding geographies have valuable data that can help provide the answers to your path forward.
Uncertainty is not new
Uncertainty is not new, especially this decade. Tullius Partners has been assisting business owners through moments like these for over forty years. We advise clients not to worry, and not to get caught up in speculation. Rather, be diligent, take a smarter approach and focus on what works while correcting what doesn’t. Then, uncertainty’s grip will have far less of an impact on your business’ future.