The world economy is facing some challenging times. With continued inflation, rising interest rates, unemployment levels, and risk uncertainty all around us, we are at one of the most critical situations in history. So, how can we ensure that we are prepared for the current financial situation?

A deep global recession is predicted. As a result, 2024 may be a year of significant economic strife and hardship for many.

To stay afloat and develop economic resilience so that you can deal with unexpected external factors, it is crucial to have an effective financial plan in place.

The way you manage some of the critical factors in the financial planning process, such as budgeting, keeping track of spending, and producing revenue, can have a significant influence on whether your business achieves its long-term goals. Thus, planning ahead of time, setting achievable goals, considering multiple future scenarios, and making wise, informed decisions early on will provide you with an advantage when stormy times arise.

Read on to uncover the 4 bold actions you may take to set up your company for potential economic turbulence and increase your chances of success.

1. Put in place a flexible forecasting model and track market fluctuations

Market fluctuations can have serious implications on corporate financial development and require constant analysis to properly inform decisions.

“It’s not the situation, but whether we react (negative) or respond (positive) to the situation that’s important.”

– Zig Ziglar

Traditional budgeting and forecasting models struggle to cater to rapidly shifting economic conditions. So, implementing a more flexible approach that considers real-time fluctuations and future events will help you better allocate your assets and adjust strategies quickly when reacting to unexpected circumstances.

By monitoring the volatility around your organization and conducting scenario planning on an ongoing basis, you are more likely to remain competitive in today’s dynamic environment; minimize the level of risk connected with unfavorable conditions, make more accurate predictions, and set realistic financial goals. All this can be achieved through the automation facilities of budgeting software.

2. Prioritize extending cash runway to overcome negative variables

Cash is the fuel that allows startups to operate; when companies don’t have enough cash, they end up fizzling out. So how do you make sure that your startup has enough capital to survive over the long run?

Managing a business involves tremendous risk, and sometimes there are external factors beyond your control, such as customer churn or macro-economic downturns, that could add pressure on your finances.

These uncertain times call for smarter financial management. To ensure longevity, one should focus on cash runway optimization and runway extension amid adverse conditions.

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”

– Dave Ramsey

One thing is certain: in tough times, cutting unnecessary costs is essential for guaranteeing financial stability while still meeting company objectives. Thus, understanding your startup’s fixed and variable costs and preparing a contingency plan are key steps to face any storm coming your way.

Increasing your cash flow and ARR, renegotiating your current provider contracts, ensuring your headcount and tech stack are optimal, and learning from past experiences are some critical measures to recalibrate your organization for savings.

3. Address customer retention as a strategic revenue driver

Customer retention is a key priority for any business, but are you treating it strategically?

Retaining existing customers is the cornerstone of long-term success for all companies. After all, it costs far more to get new customers than to keep the existing ones.

“It’s not the employer who pays the wages. Employers only handle the money. It’s the customer who pays the wages.”

– Henry Ford

Hence, investing in customer loyalty is a quick win when attempting to overcome market obstacles, since it will influence your bottom line in a fraction of the time.

A few relevant elements that can make your customer retention strategy an effective revenue driver are: Aligning your current customer base with your business strategy; continuously enhancing your product or service with new features; and concentrating on giving your customers the best experience possible so they don’t churn and you have the chance to expand.

In addition, building a strong brand reputation will help you reduce your company’s customer acquisition costs since prospective clients will learn about you via recommendations and word-of-mouth.

4. Adopt cutting-edge software to achieve operational excellence

Software technology has highly evolved over the past few decades. Companies have moved away from paper-based systems and manual data entry to automated solutions with an ever-growing range of functions. As the software landscape grows, organizations need to upgrade their tools to remain agile and responsive.

But how can you select the right solution to reach new levels of operational excellence and reduce inaccuracies?

Invest in a financial solution that enables you to remove redundant processes, automate manual tasks to save time and team effort, and scale your business as time goes on.

Utilizing new technology with a laser focus on functioning proactively rather than reactively will increase efficiency and productivity and free up your staff to concentrate on more valuable, mission-critical activities.

“Innovation distinguishes between a leader and a follower.”

– Steve Jobs

Transform market data into actionable insights with Abacum

One of the most decisive measures you can take in 2024 is to gain strategic, actionable insights from market data. This can help you improve your startup’s finance process and stay one step ahead of the competition. Do you want to find out how?

Discover Abacum, the Business Planning platform that can help you drive operational performance and move from data to execution.

With 1-click, your Finance team can gain a better understanding of the current situation of your market and customers, identify financial trends and correlations, automate BvA reporting, approve and control budget changes, build scenarios, and share real-time reports with all your shareholders.

Adopting a system that collects and processes financial information will allow you and your team to see the big picture, make better-informed financial decisions, and take the appropriate actions at the right time.