We are in familiar yet unpredictable territory. All of us entered into 2023 with a sense of uncertainty about this year’s economic future, surrounded by a lot of conflicting information, which is indicative of a volatile market. After riding and surviving market cycles over the years, including very memorable downturns, RoseRyan understands a thing or two about what we can expect in the months ahead and how to navigate through the turmoil. Times like this call for some tough questions, to prepare your company for whatever is next.

How Is 2023 Going to Shake Out?

First, let’s go over the state of things now: Nearly two-thirds of CEOs expect global economic growth to decline over the next 12 months, according to a late 2022 PwC survey. Contrast that to the 77% of CEOs who expected an increase in growth a year ago, and we’re facing the most pessimistic outlook reported in over a decade. Companies are feeling the pressure now as they report slowing growth and unprofitable quarters. Inflation may finally be cooling but prognostications about what to expect will continue to dog senior leaders as the Fed fiddles with interest rates and consumers and businesses consider tightening their spending.

However, despite a spate of headlines about tens of thousands of layoffs, mostly in the tech sector, the labor market is considered to be in good shape as many companies across the US are still in hiring mode and in fact struggling to fill spots as the unemployment rate remains low. So-called “quiet quitting” has led to lots of movement and role changes, as companies create or explore more flexible options for bringing in expertise and getting the work done.

Amid all the hand-wringing about the state of the economy, whether your company is doing well or on the brink of feeling a pinch, taking an inward look at your readiness for change is always advisable. Three big questions should be considered during a time of uncertainty: Asking them does not necessarily mean you have to act on them just yet—but going through the process will put your company in preparatory mode rather than trying to make up for lost time if things really do go downhill later this year.

Are your FP&A capabilities providing a full picture of how to act now and when the economy shifts?

Every decision is a trade-off—for every project you green light, there is something that doesn’t get funded. How do you balance economic viability, make the necessary investments for growth and make sure you have the right team in place? Skillful planning and forecasting become more important than ever. Developing a flexible model with multiple scenarios and various sensitivities built in will help identify triggers that would cause you to take action and execute on cost-cutting plans, or conversely, when to hire for critical skills. What information do you need to evaluate in order to know if you are making the right decision, and how often do you need to check in and revisit?

This isn’t a time of “business as usual” for your FP&A team—this is when FP&A needs to use their super powers to ask the right questions, gather the critical inputs and pull together robust scenario planning to facilitate quick decisions about where to cut and where to invest during this volatile economic phase. If these capabilities are missing, then outside experts can help to fill in the gaps.

How will you retain top talent if you must reduce headcount?

If you do find yourself in a position of needing to eliminate headcount, think about the key people you really need to retain. These are the MVPs that are going to help you weather the storm. But uncertainty often causes people to seek safety elsewhere, so focus on retention. What are you doing to make sure your MVPs are feeling valued and safe? How will you keep the lines of communication open, even if the news isn’t good?

Preventing burnout during a hiring freeze is not easy; many deadlines can’t be extended. The burden can be alleviated when the company allows for the use of occasional, timely outside expertise to provide key employees with support when they need it most.

What exit strategies are available to your company—and how ready would you be?

While SPAC acquisitions and traditional IPOs have slowed way down, the M&A world is still active. Would you be ready to share information about your company if a promising partnership arose?

We’re seeing plenty of companies extending their timeframe for exit—waiting out the downturn and using the time to be ready for when that window opens and valuations are more robust. Stretching your funding to get you through is a reasonable strategy, but cutting back on costs to the extent that your infrastructure isn’t ready for an exit, your books and records aren’t up to snuff for the due diligence process that’s coming, your systems can’t scale when business picks up and you are missing key talent—that’s a plan that could cause you to miss your opportunity. Valuations may be lower, but you want to be able to present your best version to attract the most interest, to keep your options open. (To start the process, see “M&A Strategies: Make a Match Made in Heaven,” a guide for both buyers and sellers on preparing to make the best deal.)

We can’t predict with certainty what’s going to happen to the economy at large, but we all need to be prepared for potential changes. The companies that will manage to do well are those that are self-aware, have a strong, engaged workforce to support them, along with clear, reliable information about the state of the business and plans for various scenarios.

Pat Voll is a vice president at RoseRyan, where she guides and develops new solutions for our strategic advisory practice, which includes corporate governance, strategic projects and operational accounting. She also manages multiple client relationships and oversees strategic initiatives for the firm. Pat previously held senior finance level positions at public companies and worked as an auditor with a Big 4 firm.