In times of uncertainty, here are actionable steps to take that I shared with my Vistage members.
Politics aside, the economy is being affected in negative ways and with long-lasting implications. In the face of unprecedented economic and geopolitical challenges, CEOs must take decisive actions to secure their businesses. Combining insights from expert CEOs and recent Vistage Chair discussions recently, I’ve pulled together some practical steps you can take right now:
1. Control and Communicate Clearly
- Anchor your team to your core mission and strategy.
- Transparently communicate with employees and customers about current realities and your ongoing actions. What information do they need and/or want from you?
- Clearly articulate your value proposition to customers to stand out in a competitive market.
- Communicate with suppliers. You both want the same goal: To sell more stuff. Have a conversation around getting costs down. Don’t assume. See if together you can come up with creative solutions, like manufacturing for less, changing designs or reducing sizes.
2. Financial Preparedness
- Secure or increase your lines of credit immediately.
- Establish strong relationships with local banks (NOT BofA, Chase, Wells Fargo, etc.). In a credit crunch the local banks will return your calls and work with you; good luck with the big banks.
- Maintain a forward-looking cash flow statement projecting at least 90 days to manage liquidity proactively.
- Capital Markets are getting tighter. Credit and investment will be harder to come by. Banks, especially the big ones, will tighten credit rules.
- Be aware of covenant triggers on outstanding debt. (You don’t want a loan to be called in.)
- Delay or halt unnecessary capital expenditures to preserve cash.
3. Pricing Strategy
- Be proactive about pricing. Increase prices promptly in response to rising costs, avoiding delays that could hurt your profitability later.
- Raise prices when people expect prices to go up. Don’t get caught being unprofitable on the backend of this crisis, when people are not raising prices.
- People are often scared they will loose customers. Experience shows the opposite; when people understand the “why” behind a price increase, they’ll step up and pay. Place yourself in the customer’s shoes: Would you rather have a series of small price increase at say 5%-10% in steps or a big jump, 25% at one time. Which is easier to understand? Which is easier to swallow?
4. Talent Management
- Recognize the hiring freeze as an opportunity to upgrade your talent pool.
- Prioritize psychological safety, support, and clear communication to retain key talent.
- Success comes from having a leadership team with unique experiences and varying strengths that complement each other.
5. Strategic Leadership
- Focus only on factors within your control and avoid becoming distracted by political or external headlines.
- Don’t panic. You make bad decisions when you panic. Bad decisions cost money and time.
- Use data-driven decision-making, focusing on objective insights rather than speculation or fear.
- The best leaders don’t get lost in endless what-ifs; they focus on the present, solving problems in real time while relentlessly pursuing excellence.
6. Prepare for Long-term Disruption
- Treat current conditions not as short-term events but as potentially prolonged disruptions. Assume this is the new normal (until we have reliable information to the contrary)
- Anticipate future challenges, including inventory replenishment, global logistics bottlenecks, and supply chain constraints.
- Adapt strategically to changing global economic alignments and disruptions in international trade.
- De-risk your business for the long term. Find new sources, including back-up suppliers and products from multiple companies and countries.
- Find US sources if possible. That’s what the government wants. All these tariffs are incentives to get you to source from the USA. Swim with the currents.
7. Embrace Opportunities
- Look actively for opportunities within this crisis—such as recruiting key talent and strengthening your market position.
- If the face of everything ensure you are providing value to customers.
Strong leadership thrives in uncertain times. Stay decisive, communicate transparently, and remain resilient by proactively managing your financial resources and team morale. Lean on your Vistage members. If you need perspective on big decisions, bring them to 121s and meetings. If you need something quicker, we can get members together on a zoom call to pressure test decisions before you need to execute on them. I am here to help you.