Building a Business Resilience Playbook: How to Thrive Through Economic Cycles

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At our September i4Series networking event sponsored by SCRA, data expert and Go Fig Co-Founder Nathan Freystaetter joined business analyst Randolph Johnson from Lima One Capital to share valuable insights about building a business resilience playbook. The conversation explored key strategies for helping businesses not only survive but also grow and capitalize during economic fluctuations. Here’s a recap of the most valuable takeaways:

Understanding Where We Are in the Economic Cycle

Experts believe we are currently at the peak of an expansion cycle. JP Morgan’s Jamie Dimon predicts economic deceleration will likely begin in 2025, signaling the start of a contraction period. Unemployment has already risen slightly, and economic growth has slowed over the last two years. Businesses should be aware that this current phase—characterized by higher competition and increasing demand—won’t last forever, and preparations for future downturns are crucial.

Impacts of Economic Cycles on Businesses

During boom periods, businesses often face a flood of new clients and competitors. The challenge becomes whether companies can scale quickly enough to meet rising demand. This requires efficient hiring processes, strong networks, and robust technology. Automating key tasks and ensuring compliance in areas like taxes and certifications are essential to success.

But businesses shouldn’t just be on the defensive during downturns. Smart companies view bust periods as opportunities. With lower costs for labor and property, these companies can make strategic investments, acquire new assets, and adjust their offerings to meet changing market needs. For example, a marketing agency might reallocate its team to specialize in a specific industry when other services become less relevant. Businesses that pivot effectively during these periods can emerge stronger than ever.

Resilience Is More Than Just Defense

Resilience isn’t about being overly cautious—it’s about playing offense. Companies that thrive, even during economic downturns or unexpected crises, often do so because they’re ready to scale and innovate. A powerful example was given about a home goods store that established an online shopping platform right before the COVID-19 lockdowns, allowing it to grow rapidly while competitors struggled. Similarly, businesses that quickly adjust to the market using technologies or alternative strategies during contraction periods can outperform those that are caught off-guard.

Why Build a Business Resilience Playbook?

A resilience playbook is like a sports team’s game plan. Just like how an NFL team doesn’t wait until the final moments of a game to decide what play to call, a successful company needs to prepare strategies ahead of time for all types of economic scenarios. For example, Capital One managed to thrive during both expansion and contraction periods by building a well-structured plan that included stress tests and market analysis. They even looked forward to economic downturns, knowing that their competitors, unprepared and overextended, would falter, allowing Capital One to take advantage of the opportunity to increase their own market share in the ensuing expansion period.

How to Start Building a Business Resilience Playbook

1. Test Your Resilience: Assess your business’s vulnerabilities under various scenarios, both predictable and unpredictable.
2. Address Weaknesses: Tackle the most significant risks that could harm your business.
3. Build a Playbook: Map out clear action plans for what the company will start doing, stop doing and continue doing in the scenario where the economic cycle changes from a period of expansion to a recession and vice versa.

Practical Example: A Marketing Agency’s Plan

Let’s imagine a marketing agency called Launchminds with 100 clients, 40 employees, and $12 million in annual revenue. To prepare for a potential contraction period, Launchminds could do the following:

• Stress Test: Identify risks, like losing a significant portion of its clients.
• Narrow Focus: Prioritize the products and services that your company does exceptionally well, and spin off anything else that creates distractions from your core value proposition or core revenue.
• Tighten Financials: Use strategies like “Sell Disciplines” to make smart decisions about which investments to hold and which to drop.
• Diversify on Key Vulnerabilities: Ensure the company isn’t relying on a single revenue stream or supplier to keep the ship afloat. Ask yourself what could happen that could cause the business to go bankrupt, and address those areas first.
• Empower Frontline Employees: Encourage input from employees on the front lines, who may have valuable insights to plug any leaks in the business, so that your business can continue to run as efficiently as a well-oiled machine.

Making Use of Data and Analytics

Being able to measure business performance is crucial when creating a resilience playbook. For companies that can’t afford professional analytics firms, there are alternative options using business intelligence platforms like Go Fig and training team members in data driven leadership and project management. Embedding these skills across departments ensures that every part of the business is on the same page and prepared to adapt during both good and bad times.