How to prepare your company for an economic downturn - 6 tips from Evolvefy

6 tips from Evolvefy
1. Implement cost control measures and create a financial buffer.
2. Ensure that you have the proper CFO support to grip cash flow tightly.
3. If seeking capital, you need to start early compared to before. Previously, a 6-month lead time was enough, but today it can take over a year.
4. Ensure your team understands the current situation and is prepared to support the company by increasing flexibility or broadening its role.
5. Take advantage of the situation and prepare for a turnaround because it will come - it's just a matter of time.
6. Hire consultants and wait to hire if you are unsure whether the organisation needs restructured.

Which companies are most affected?
-It's especially tough for companies that need to raise capital. Many investors have hit the brakes because assessing risks today is much more complicated. According to an article in SvD, investments in US growth companies fell by over 60% in the last quarter of 2022, and we are seeing a similar trend in Sweden. Therefore, long-term planning to survive has become increasingly important, and since everything takes longer, patience is required, says Jens.

How do you prepare for a recession?
-Some companies may need to scale down or change their organisational structure and, in the worst case, lay off employees. These can be difficult decisions for management, but it's essential to address the issue early on and prepare the company for different scenarios, says Marlene Blomquist Börjesson, who, together with Jens Ålander and Peter Larsson, runs the consulting firm Evolvefy. If an employee leaves the organisation, reviewing the needed roles and creating a more flexible organisation may be appropriate. When scaling down, positions become broader, and job descriptions must be checked. As we advance, companies may need employees who can switch between different tasks based on the company's needs. We are also noticing among our customers that the demand for CFO interim has increased and that they are withholding recruitment. The increase in the interim market is very typical of a recession. It is also vital to prioritise what is most critical to the business, and what is "nice to have" simply must wait. Therefore, it can be an excellent investment to bring in temporary expertise until the situation stabilises, and sometimes a part-time CFO is enough, concludes Marlene.

In conclusion, how long will we be in this situation?
-"That's a million-dollar question," says Jens with a smile. We see no improvement in the war in Ukraine or the COVID situation in China. It largely depends on how each company can adapt to the current situation. Can they adjust their production and cut costs, or are there opportunities for organisational changes? It is up to each company to manage the business's long-term survival. If you need more clarification, you should seek advice from a risk management consultant who can guide you.

‍Evolvefy helps entrepreneurs and business leaders in growing companies build financial structural capital to realise their growth plans. When a company grows, the finance function shifts, and the need for CFO expertise depends on the company's phase. This is where things can often go wrong and become very costly. That's why we exist. Our concept is based on flexible and tailored solutions. We offer Growth Analysis, CFO Interim, Recruitment, Risk Management, and Accounting Services.

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