Regarding the next downturn, it’s not a matter of if, but when, so my question to you is this: Is your business ready?
We’re all benefiting from this booming economy, but as with anything in life: All good things come to an end, and while we all know this, many of us aren’t prepared for the next downturn, which could be sooner than later.
There’s a “real possibility” of a recession in the next 18 months, according to a report published by the Economic Policy Institute in April, so if you haven’t given a downturn much thought, you should.
There are a few ways you can better prepare your business for a recession.
Simply, check your business’s fundamentals
Oftentimes, the ongoing monitoring of your business’s fundamentals can soften your financial hardship during a recession, so knowing your numbers is key to helping you survive a downturn.
Now, it’s one thing to know your financial statements — including your balance sheet, income statement and cash flow statement — but what about the top metrics many MSPs monitor?
For instance, when was the last time you reviewed your seat prices, ticket noise levels or MRR?
Before the next recession hits, check the overall financial health of your business and make any necessary adjustments (even if it means firing a customer or two).
Identify risks in your customer base — and mitigate them
Evaluate where you can improve your portfolio and identify how you can mitigate risks.
For example, is one customer keeping on your lights? If so, you’re in an extremely vulnerable position — especially whenever the next recession hits our economy.
To avoid falling into this common trap, always stay aware of the strengths and weaknesses in your customer base, so when the time comes, you can control the situation by adjusting accordingly.
There’s also someone close to you within your organization who can help you with monitoring the ongoing status of the customers in your portfolio — and that’s your vCIO.
Ensure your vCIO is solidifying business relationships with your customers
Your vCIO is a wealth of knowledge — this person should be, anyway — so use this asset to your advantage when assessing your customer base for potential loss.
While these business relationships are going to be key to your success when there’s a recession, your value ultimately separates you from other expenses.
If you’ve already transitioned your business model to Technology Success Provider (TSP), then thinking about your worth in terms of expenses is a bit out of date, but if you haven’t, then proving your value to customers looking to cut costs can be a challenging task for any business owner.
Here’s the good news: If you’ve been developing Strategic Roadmaps — basically, blueprints for long-term technical strategies — for all the customers in your customer base, you’re in good shape.
On the other hand, if your vCIO hasn’t been properly organizing initiatives, recommendations and budgets — all of which are outlined in a Stategic Roadmap — for your customers, find out why and help tackle the obstacles preventing your vCIO from developing these frameworks to success.
Remember: These long-term strategic outlooks reinforce your value as a trusted business advisor.
The time to prepare for a recession is now. If you’re unsure where to begin, start with the fundamentals. Then, identify the risks in your customer base and while you’re doing that, ensure your vCIO is keeping up with managing your business relationships with customers. While no business is safe from a recession, a prepared business can walk away with minimal damage.