When economists are being self-deprecating they often say they “predicted 12 of the last 8 recessions.” The line is always good for a chuckle. And like most humor, it’s funny because it’s built on a stinging truth.

Recessions happen. So do recoveries, but frankly, tax-paying citizens of the U.S. tend to think of good economic times as “the usual” and recessions as unpleasant events to put off as long as possible if not avoid altogether. The idea that economic up- and downturns are as normal as sunny and rainy (and perhaps snowy) weather in turn just doesn’t fit most hardworking Americans’ expectations for life.

A storm’s a-comin’, though, maybe next month, or next year, or two or three or five years from now. The longest economic expansion in history will end, and processors need to be ready. What does “ready” look like? I suggest it includes:

Plans for judicious capital expenditures. Borrowing costs can’t get much lower but in a recession they are less likely to rise, so the next couple of years would be a good time to upgrade your equipment.

A plan to hold labor costs steady. As the pool of available employees has gotten tighter, and tighter, and tighter, processors have boosted recruiting efforts, benefits and pay rates. But historically, labor markets have been tightest just before a downturn. In a time of recession, efforts to recruit employees are likely to get a little easier (although truly guaranteeing a stable, long-term workforce would likely require a return to pay rates more in keeping with levels seen in the early 1980s).

Investment in existing employees. Companies that don’t want to return to desperate recruiting efforts when the economy picks up should take the opportunity to double down on training, supporting and showing existing employees that they are valued. Any benefit the company can add that builds in longevity, like tuition assistance for employees and/or their families, will offer a hefty return over time. Consider also day care and after-school care and homework help for kids; younger millennials are becoming parents and Gen Z is not far behind; these are your seasoned employees of the future.

Increased investment in marketing. Maybe it feels like a luxury, but data abounds showing that dollars invested in marketing during a downturn pay off handsomely in a recovery. Customers remember which suppliers were there with programs and marketing ideas and support when times were tough. Smart processors will reap the bonuses soon enough.

Refinancing any higher-interest debt still hanging around. You mean you haven’t done this yet? Seriously? Get on it!

When times are tough, the planning horizon tends to get short. Don’t let it. You’ve had plenty of warning to draft your recession scenarios along with your “best case” projections. Now is the time to put those contingencies into operation.

Are you ready for Recession 2020?

Join for free* to continue reading.