How to Prepare Your Business for the 2024 Recession

After the Federal Reserve Board made increases to the federal funds rate last year in its bid to combat inflation, a macroeconomic recession we had forecast for mid-decade was pulled forward. It will begin in late 2023 and continue through 2024. Now that there is less time before it arrives, ITR Economics is here to help your business prepare for the 2024 recession. 

As briefly mentioned during our December Executive Series Webinar, there are three crucial factors to consider as you prepare for this upcoming recession. They are:

• Assessing Your Cash Needs
  • If you carry inventory, make sure you are properly estimating the amount you want in 2024. This way, you are not tying your cash up in inventory.
    • On the other hand, think about what you will need to improve your operation or gain efficiency coming out of the recession in 2025. If you wait too long to make these improvements, they will cost more in the future.
  • Follow ITR Economics and calculate your rates-of-change to have a better understanding of where your cash needs to be.

• Maximizing Your Competitive Advantages
  • When the economy slows down, you need to provide your customers with a good reason why your product or service is the best choice.
    • Consumers might be looking to save money. Even if you have to give a little on price, having your best and most profitable items ready to go will help you maintain profitability.
  • By knowing where your business and markets fit in with the economy, you will have a strong upper hand over your competitors, as you will be far more prepared for what is to come in the future.

• Considering Expanding Your Asset Classes
  • There is typically a shift that needs to happen in order to maximize the return on your investments during a recession. Follow the ITR Optimizer™ to best adjust for whatever the economy is telling you.
    • To learn more about the ITR Optimizer and how it can help you reduce risk in your investments during an economic downturn, click here.

While recessions are not all the same and will impact businesses differently, keep in mind that all three of these action items are applicable to all recessions, not just the one coming in 2024.

[ Further Reading: Five Positive Benefits of a Recession ]

How Business Leadership Changes During a Recession

It is important to remember that how you lead your businesses will need to change during a recession, no matter how mild or severe the economic downturn.

Even in a mild recession, people’s mindsets will naturally shift toward fear of what can happen – especially if misleading news headlines further stoke the concern. If your employees are afraid of what is to come, or if they are discouraged or distraught, it is your job to give them safe guidance through that fear.

Make sure you are up to the challenge of leading your company, because business leaders set the tone and the culture, and many will be looking to those in charge to help navigate them through the storm.

All too often, when businesses are in a recession for six months, nine months, or even a full year, they become so focused on the economic slowdown at hand that they neglect to consider the coming upturn. Do not fall victim to straight-line thinking, but rather be thinking a full business cycle ahead to gain the advantage over your competitors.

Whether you are keeping up to date with our blogs, TrendsTalk episodes, or subscribing to a free 30-day trial of the Trends Report™, if you follow ITR Economics, your business will be much better prepared for the 2024 recession.