Are we at the bottom? Four tactics for growth during the soft landing.

Capital markets rallied after the October inflation report indicated the worst might be behind us. On the other hand, companies like Meta and Twitter are moving forward with massive layoffs. Should small businesses cut costs like the tech giants or invest in growth like the capital markets?

Nobody knows whether we are emerging from the bottom or about to plunge deeper into recession. Moreover, your industry may decline during an economic turnaround or thrive during a downturn. As a fractional CFO, here is what I look at during economic uncertainty to advise companies whether to remain defensive or lean into growth.

Monitor top-of-the-funnel KPIs.

The top of the funnel is your business’ crow’s nest – the first indicator of weakening or strengthening demand. Examples of top-of-funnel KPIs include:

  • Website visits
  • Ad impressions
  • Click-through rate
  • Inbound inquiries
  • Qualified leads identified

Monitor this metric obsessively – at least weekly. Compare against both the prior month and the prior year to account for seasonality.

Gamble with small stakes.

This moment of great economic uncertainty is not the time to bet all your chips on a new product or service. Instead, your growth investments should be incremental and discrete. For example, you may hire one new salesperson for six months to see if they can generate an ROI. Or you may invest a fixed amount into a limited test run of a product to determine the market fit and identify QA issues. These measured growth initiatives move your company forward and buy you more time to see how the economy recovers before committing large or undefined amounts of cash.

Be mindful of your capital.

Limit your investments to cash available. With interest rates at multi-year highs, now is not a great time to borrow money for speculative investment. Instead, focus on generating returns with your existing resources – your people, equipment, and inventory.

Meet with your team regularly.

Occasionally meetings are a waste; other times, they prevent significant blunders. When facing economic uncertainty, err towards resilience by holding frequent meetings with all your departments, especially sales and finance. Regular communication should include comparing notes, spotting emerging trends, and challenging assumptions.

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