BEST PRACTICES
Mindsets for Managing a Slowdown BY MIKE MARKS, INDIAN RIVER CONSULTING GROUP
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Mike Marks is co-founder and managing partner of Indian River Consulting Group, a consulting firm to distributors and manufacturers. He specializes in helping distributors and manufacturers accurately diagnose problems and identify risk-bound alternatives. Contact him at mmarks@ircg.com or visit ircg.com.
112 • First Quarter 2023
ur national media likes to play Chicken Little – predicting calamity with the merest justification. We’ve heard the predictions we’ll be facing a recession in 2023, but the pundits vary in terms of when and how deep the recession will be. A lot of people are getting caught up in the news, but you won’t find the answers to what you need to do for your business in the pages of a newspaper. The media is focused on the most views, while you need to focus on how to prepare for an economic downturn. Distributors are better positioned than B2C companies to weather a recession, so they should try not to pay too much attention to the current events and prophecies of despair. In fact, distributors will come out ahead if they take the time now to strengthen their company. Think about a pendulum. Before the pandemic, everyone had their prices and quantity optimized. Things were moving—then chaos. The supply chain broke, the pendulum swung wildly, and pundits are predicting it will swing sharply again. That’s not the case. The pendulum swings until it’s stable—we
just haven’t reached that stable part yet. The good news is that distribution always has a way of coming out of a recession stronger, leaner, and meaner than before.
3 WAYS DISTRIBUTORS CAN PREPARE FOR A POTENTIAL ECONOMIC DOWNTURN Regardless of whether a recession is upon us, distributors need to be fast and nimble. Success will be contingent upon how quickly you can think on your feet, and that response time can be helped by doing a few things. Do any one (or all three) of these three strategies to be better positioned at the end of any economic-uncertainty tunnel.
1. WATCH INVENTORY EXPOSURE. Remember the Great Recession? If a recession is upon us, the proven thing is backlog will vaporize. It’ll evaporate. Distributors will get choked up because they haven’t evaluated their exposure. Then the backlog of inventory shows up—and they have to front the bill. In recessions past, distrib-
