Andrew Lokenauth, a finance expert who has worked for the likes of Goldman Sachs, has seen economic meltdowns in the past. And, this year, he feels business leaders should call upon lessons learned from the 2008 “Great Recession” to weather any economic storm on the horizon.
“From the 2008 recession business leaders should’ve learned the importance of having a crisis plan in place, the value of having a diverse and resilient supply chain, and the need to proactively manage their resources and cash flow,” said Lokenauth, who also has experience as a food industry analyst.
“It’s important for businesses to be vigilant and prepare for any potential challenges, as even a mild recession can have a significant impact on their operations,” he added.
With some financial experts predicting a fairly significant downturn soon, here’s advice to survive a recession. (Editor’s note: This topic is examined in-depth in The Food Institute’s April report, available to members on April 4. To join FI, click here.)
Closely examine staffing
Many analysts feel the ongoing labor shortage is the biggest issue facing food businesses currently – and the problem shows few signs of slowing. Many CEOs suggest prioritizing the positions on a business’s staff, considering each employee’s value to the company. Often, a staff’s work can be consolidated.
Also, “Can you find cost-saving measures by negotiating insurance (health, workers comp, premiums, etcetera), travel, 401(k)s and pensions?” suggested David Sussman, the CEO of Valcor, a small-business restructuring, debt mediation and capital-acquisition business. “Even the location of the company; we’ve spoken with hundreds of small business clients over the past decade that have moved their businesses from high tax/regulation states to more business-friendly climates, offering existing employees (the opportunity) to move with the company.”
Speak with your banker
During times of economic uncertainty, it’s imperative to communicate with your bank to discuss your business’s bank loans, lines of credit, and credit cards before late payments begin.
“Banks don’t want any non-performing loans,” said Sussman. After all, the CEO added, non-performing loans “impact the bank’s ability to borrow from the Federal Reserve at competitive rates, therefore they’re likely to work with a borrower to help prevent any potential loan defaults.”
Keep customers away from price increases
The restaurant industry is witnessing more and more customers choosing takeout instead of dining in or delivery to avoid extra costs including tipping. Bob Vergidis, founder of pointofsale.cloud, feels business leaders should do everything they reasonably can to shield customers from price increases. After all, in 2023 most businesses can’t afford to lose customers to competitors.
“Lower the cost of goods where you can without losing the quality of goods and services, and focus on the total cost to the customer,” Vergidis suggested.
Above all else, this is no time for business leaders to panic, Sussman said. After all, there are still a lot of consumers these days who are spending significantly.
“The fact consumers are still finding ways to funnel money into the economy could mean a recession may be imminent but short-lived,” the CEO said.
The Food Institute Podcast
Click the play button above to listen to the episode.
How did a small sub shop from Point Pleasant, New Jersey, grow into a 2,400-store operation across 50 states? Jersey Mike’s Franchise Systems Inc. senior vice president Caroline Jones shares the company’s evolution after deciding to franchise the concept in 1987. Additionally, Jones shares stories of growing up in the business, and how the company’s philanthropic efforts help to endear franchise locations to each community they serve.