Downturn Readiness Assessment

    The downturn that hits you won't make the news.

    It's your biggest client leaving. A job you staffed up for getting pushed a year. A key person walking out. Prepared businesses recover faster and come out stronger. This assessment shows you where you're exposed before that happens.

    35 statements across seven areas of your business. About ten minutes.

    Assessment statements

    Scale:0 Not at all1 Needs work2 Got it, no work needed

    Leadership

    0 / 10
    1. 1.Every leader knows what function they own and the 3 to 5 priority outcomes for that function, and has a scorecard that measures those outcomes.
    2. 2.Every team member understands the required outcomes for their role, the core values and behaviors of the organization, and how they affect the company's performance.
    3. 3.We invest in our leadership team's development and the development of every team member, and each employee is actively working on an area of growth with regular check-ins.
    4. 4.We understand our core business and intentionally avoid unnecessary distractions that increase costs with little or no return.
    5. 5.We have defined the necessary personal financial and time sacrifices that leaders must make in a downturn and have a proactive plan to lead by example so our business can survive and thrive.

    Technology

    0 / 10
    1. 1.We understand how leading competitors are leveraging technology in our industry and are intentional about matching or exceeding their efforts.
    2. 2.We use technology to capture and create the necessary data analytics to make quick, informed decisions.
    3. 3.We have performed a recent cloud readiness assessment and are leveraging the cloud in the best way possible for our organization.
    4. 4.We regularly evaluate the software solutions we use throughout our organization (e.g., CRM, Finance, HR Benefits, Payroll, etc.) and leverage the best solutions currently available.
    5. 5.We have a strong technology team (in-house or outsourced) that is directing our technology strategy and ensuring we remain competitive.

    People

    0 / 10
    1. 1.We have developed a retention strategy for key employees.
    2. 2.We measure employee performance regularly, frequently hold professional development conversations with each employee, and ensure they understand where they stand.
    3. 3.Our people are cross-trained and there are at least two people with knowledge to perform critical tasks.
    4. 4.We have identified federal and/or state unemployment programs that may be used in a downturn.
    5. 5.We have evaluated and pre-selected a labor cost reduction strategy (i.e., 10% workforce reduction vs. 10% reduced hours vs. 10% reduced compensation) that can be implemented if needed.

    Customer/Vendor

    0 / 10
    1. 1.We have identified our customers who are most susceptible to a business or economic downturn and have analyzed the impact on our business if they fail.
    2. 2.We have identified and are tracking the critical economic leading indicators for our company and our customers/vendors and regularly discuss them with our customers/vendors.
    3. 3.We closely monitor our accounts receivables and communicate with our customers, and our A/R is current.
    4. 4.We are not overly reliant on just a few suppliers or vendors. Instead, we have multiple sources of supply, so if one fails, we can still operate successfully.
    5. 5.We have negotiated favorable credit terms with our vendors to provide payment flexibility should we need it and are minimizing long-term commitments should we need to reduce service levels or exit the contract altogether.

    Balance Sheet

    0 / 10
    1. 1.We have an established line of credit, have worked to increase the size of the line, and have significant available capacity on which we can draw.
    2. 2.We identify covenants (debts and contracts) that could trigger if financial results or ratios fall and proactively negotiate greater future flexibility.
    3. 3.We understand and regularly monitor and manage the cash drivers for our business and have a cash reserve that will cover several months of operating expenses.
    4. 4.We have a contingency plan in place to offer our customers extended terms through a third-party and to factor our Accounts Receivables.
    5. 5.We constantly review requirements to ensure our inventory is optimized to prevent a disruption in service levels without tying up unnecessary cash.

    Revenue

    0 / 10
    1. 1.We know what percentage of our revenues are discretionary vs. necessary purchases for each customer/client.
    2. 2.We have sufficient diversity in our revenue sources, so one or a few clients or market segments don't dominate our total revenue.
    3. 3.We have identified our most profitable relationships and implemented a key account retention strategy for each.
    4. 4.We've evaluated our market and have identified revenue sources and clients that can survive a downturn.
    5. 5.We know our breakeven point and are willing to accept revenue that will cover expenses, without taking on bad business, in a downturn.

    Expenses

    0 / 10
    1. 1.We have identified and prioritized our operating expenses as "Critical to function," "Not critical but important," and "Not critical but nice to have," and are prepared to eliminate expenses as needed proactively.
    2. 2.We have minimized our real estate expenses by maximizing the use of existing space, selling or subleasing unused/under utilized space, and are monitoring the real estate market for more favorable terms.
    3. 3.We have identified and evaluated fixed costs that can be turned into variable costs by outsourcing them to third-party providers and consultants.
    4. 4.We actively implement LEAN practices to improve operating efficiency and effectiveness in all business areas.
    5. 5.We actively solicit and implement cost-saving and process-improvement ideas from our employees.
    0 / 35

    A Pinnacle Business Guides™ tool, via Apogee.

    Downturn Readiness Assessment co-authored by Craig Huston and Convene, based on Convene's content piece "Preparing for the Inevitable Business Downturn." Used with permission. © 2023 Summit Achievers. © 2023 Huston Consulting Group, LLC.