At some point, your business may face an economic or category downturn. Are you ready?
A downturn assessment will help make your business recession proof. Learn the simple 4 step process and prepare your business.
Did you know that during the last recession, companies prepared for a downturn enjoyed a 17% CAGR, compared to only 4% from unprepared companies?
Kovac and Cleghorn utilized Bain research to show how companies that prepare for a recession dramatically outperform those that don’t, both during and after a downturn.
Being prepared not only helps navigate through a downturn but also allows your business to grow faster after one.
Laczkowski and Mysore analyzed the 07-’09 downturn to understand why resilient companies not only survived but thrived once the downturn was over. They found that companies demonstrating resilience took early and prompt action, enabling them to surpass their peers and gain a long-lasting and definite edge.

Downturns can occur unexpectedly, from complacency, competition, canceled projects, economic shifts, technology changes, or global crises. However, businesses can prepare for such situations.
A preparedness assessment can provide insights on how to improve areas that need attention. While no guarantees exist, research suggests that businesses prepared to recover faster and become stronger after a downturn.
Companies have begun preparing for expected downturns in 2023. Starting in 2022, the tech industry laid off tens of thousands of workers to reduce overhead expenses. In 2023, other categories have followed suit, including business services, retail, manufacturing, and financial services.

Source: visualcapitalist.com
However, to truly be ready for a downturn, businesses must look more broadly at their organizations to understand if they have the right leadership team in place and if they’re leveraging technology that drives efficiency and effectiveness.
Businesses must ensure that their customers and vendors are loyal, that their people are happy and eager to stay even through a downturn, and that their sales and marketing teams are ready to drive opportunities into their business even when headwinds exist in their category.
While these questions may sound scary to ask, businesses must assess where they stand today.
Taking the first step is easier than expected. Many different ways exist to assess and organize for a downturn.
A simple four-step process works well for clients: assessing, ranking, building a task plan, and identifying obstacles in the way to success.
Are you regularly assessing your business’s preparedness? It’s never too late to start.
We offer quarterly, bi-annual, and yearly downturn assessment options. Sign-up below to learn more.
STEP 1
Start by benchmarking seven key areas: leadership, technology, people, customer/vendor, balance sheet, revenue, and expenses.
These results are mapped on a Business Downturn Readiness Wheel.
Step 2
Identify the three biggest risk areas from the benchmarking and assign a ROCK owner. Prioritize them and create due dates for each item.

Step 3
Build a list of tasks that need to be accomplished to address each ROCK.

Step 4
Identify the obstacles that need to be overcome to complete each ROCK.

Want to learn more about the Next Level Catapult Downturn Readiness Assessment?
Frequently Asked Questions
How do I recession proof my small business?
Start by assessing your business readiness to withstand the impacts of a recession.
- Perform a readiness assessment by benchmarking key areas such as leadership, technology, people, customer/vendor, balance sheet, revenue, and expenses.
- Identify the biggest risk areas from the benchmarking. We recommend choosing the three largest risk areas.
- Assign a risk owner for each one. Prioritize risks and create due dates for each item.
- Build a list of tasks that need to be accomplished to address each risk.
- Identify the obstacles that need to be overcome to complete each risk.
- Take actions daily and track them regularly to complete the tasks and overcome the risks.
- Set bi-monthly or monthly check-ins on progress.
How do I handle a downturn in a business?
It’s never too early to prepare for a downturn in your business. And it’s not just economic downturns that businesses prepare for. Many categories are currently being disrupted by new technologies like AI, outsourcing, labor availability, and more.
Start by making a list of all the potential reasons your category or your business could be affected.
Perform a downturn assessment based on all of the potential disruptions and evaluate how the current structure of your organization is prepared to face these potential challenges.
Learn more about a downturn assessment in the article above.
What business can survive a recession?
Not only can businesses survive a recession but they can actually thrive and grow quickly coming out of immediately following a recession. To be one of these businesses, you have to be prepared for an economic downturn.
A downturn assessment is the first step in determining if your business can survive the impacts of a recession.
Research shows that businesses that are prepared for an economic downturn thrive and grow during and after a recession.
Companies prepared for a downturn enjoyed a 17% CAGR, compared to only 4% from unprepared companies.
What business does well in a recession?
While certain businesses do tend to be recession-proof, your category has less to do with your ability to survive a recession than how prepared your organization is for a downturn. Successful navigating a recession requires:
- A strong leadership team
- Leveraging the right technology to drive efficiency and effectiveness
- Having the right people in the right seats
- Strong relationships with your customers and vendors
- A clean balance sheet
- A strong revenue pipeline and process for maintaining and growing that pipeline
- Control over fixed and variable expenses
Sources:
https://hbr.org/2018/11/what-sales-teams-should-do-to-prepare-for-the-next-recession
https://hbr.org/2019/05/what-companies-should-do-to-prepare-for-a-recession
https://hbr.org/webinar/2020/05/what-resilient-companies-do-differently