After a red-hot, post-COVID bounce-back, the telltale signs of an impending recession are here: the yield curve has inverted, commodity prices are extremely volatile, the markets have had the worst six months since the financial crisis in 2008, and an emerging asset class – crypto – has imploded. We are in the midst of the pregnant pause: no longer "will it, won't it?" but rather "when will it?"
While predicting the timing and depth of any economic downturn or even recession is subject to a multitude of variables, in our 17th Annual Turnaround and Transformation Survey, we asked more than 600 of the world's leading restructuring experts – the professionals most experienced in responding to the downside of economic volatility – how they view the current climate.
While no prediction is ever 100% accurate, this is as close to a consensus forecast as it comes.
AlixPartners 17th Annual Turnaround and Transformation Survey | Preparing for the Storm
Just like sailing, preparing for the storm and leaning into it is the best way to get through a downturn. In all cases, the preparations to prevent downside impacts will drive the kind of active management that will achieve positive outcomes no matter the size of the economic waves.
Some no-regret moves will help business leaders to be prepared:
MAKE CASH FLOW A LEADING INDICATOR. Actively monitor cash flows – these are a leading indicator of market shifts and business health. Build cash reserves as best as possible to ensure better resiliency in market volatility.
RENEGOTIATE SUPPLIER PRICING. Call suppliers and ensure that the pricing you are getting actively represents true market costs. Recover price increases that were pending on higher input costs. Don't be a price taker, lean in and be a price maker.
ASSESS SCENARIOS. Spend time identifying potential scenarios. What would a mild, moderate, and severe recession do to your business? What actions would you take in each? What are the early warning signs that will inspire action? Who in your team is best equipped for what might lie ahead?
CATEGORIZE BUSINESS LEVERS. Define key levers in the business to pull in a downturn. Split them into three categories: easy to reverse, hard to reverse, and mission critical. If a downturn happens, pull the levers in reverse order to mitigate the potential damage that each will do to the business.
PREPARE FOR OFFENSIVE MOVES. Downturns create a buyer's market. What are the actions you would take to reshape your market, if you could? If you have a plan ahead of time, you will be faster to act when opportunities come available.
AlixPartners 17th Annual Turnaround and Transformation Survey | Preparing for the Storm
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