The economy faces a bleak midwinter

Economic winter is coming. This is the warning from some economists.

Sometime toward the end of 2019 or in early 2020, the talons of a worldwide economic slowdown will dig into the world’s economy.

Pundits say that the U.S., Europe, and China, whose fiscal slowdown may already be starting as witnessed first-hand by Apple, will start a slow, steady decline at some point in the next nine to 18 months.

Recessions tend to come in eight- to 11-year cycles, which means we are due. It only remains to be seen if the dip will be sharp and deep, like in 2008, or more gradual in nature.

Unless you plan on opening a truly recession-proof business, such as a funeral parlour or debt collection agency, it’s time to start planning. During the last recession the government offered wage subsidies and financial help, but many companies didn’t take advantage of them until it was nearly too late.

During this pre-recession time, you can take steps to help your business become more recession-resistant.

1. Get lean. Manufacturing experts have been preaching from the gospel of lean since the 1980s, and it’s more important than ever to become a convert. Lean principles are necessary in today’s manufacturing world because reducing waste is an easy way to improve the bottom line. Becoming an operation that espouses lean principles in all areas, including your office, can make the eventual recession easier to weather by improving cash flow and maintaining your company’s important role in its supply chain.

2. Automate. An investment in automation now can reduce per-part costs and set your company up for both short- and long-term gain.

Reducing production costs is another way to boost on-hand cash needed to survive when orders start getting reduced or disappear altogether.

3. Diversify. According to the Business Development Bank of Canada, nearly one in six well-established businesses encounters financial difficulty when it loses a single, important client.

Diversification can come in many forms. New market sectors, geographic locations, and product lines should all be explored. After all, just because Canada may be in recession doesn’t mean the same can be said of other areas of the world.

However, international expansion requires careful planning and research, which need to be done far in advance of any downturn.

A recession is just like any other challenge: something to be overcome by a combination of proper planning and working smart.