In 2024, the U.S. economy is still affected by last year’s Federal Reserve rate hikes, which raised interest rates and increased the cost of capital. The government was able to contract the economy enough to induce what is believed to be a “soft landing.” This slows down economic growth enough that inflation falls while unemployment remains stable, avoiding a recession. Given the continuing economic uncertainty, consumer confidence and spending is likely to slow as well.
As a person involved in your company’s fiscal oversight, you should be focusing on ways to streamline your business, boost productivity, and prioritize cash flow management. Some of the newer AI financial technologies can provide an excellent way to monitor expenses, find ways to cut costs, plan for different financial scenarios, optimize payment terms, and maintain a good cash flow. AI can also improve business efficiency by optimizing inventory and ordering.
An economic slowdown is a good time to retrain staff, using technology to free them from repetitive tasks and having them focus on your customers. It’s easier and less costly to keep people employed than to rehire them later and they’re more motivated by having job security. Having engaged staff makes a business more resilient and employees are less likely to experience stress and burnout.
Financial leaders can find growth opportunities—and even new markets—during a “soft landing.” Maintain a strong focus on the customer experience so you can build trust and brand loyalty. Does your business use digital marketing and mobile-friendly e-commerce? Customers increasingly want to buy online from socially and environmentally conscious companies. Is your company incorporating sustainable and ethical business practices, including diversity, and inclusion? Consider marketing products or services to other businesses. Diversifying with B2B offerings provides another income stream if consumers cut back on spending.
Consider securing funding before it’s needed, such as qualifying for a business line of credit before you need to borrow capital. During a “soft landing,” lenders are likely to tighten borrowing requirements and raise interest rates. Build a relationship with an alternative lender who offers customized lending packages and smaller loan sizes. A good alternative lender wants your business to succeed and will work with you as a partner to fund your growth now and in the future.
To learn more about funding strategies and other ways to fund your small business, listen to The Funding University Podcast with Seth Block, CPA. Nationally recognized financial industry expert, Seth Block is the host, as well as Executive Vice-President of ThermoCredit. Every month, The Funding University Podcast covers important topics like SBA lending, and interest rate hikes, and has guests who are experts in the lending space discussing financial topics of the day. Tune in to the monthly Funding University podcast at www.thefundinguniversity.com/podcast.
Sources:
ASBN: 2024 Small Business Trends: https://shorturl.at/bfhl2
CFO Share: Soft Landing Strategy: https://shorturl.at/euKUV
Live Oak Bank: How Your Small Business Can Prepare for a Recession: https://shorturl.at/jnWX3
Work Futures: A Soft Landing and a New Era: https://shorturl.at/qtESU
