After the recent run on Silicon Valley Bank, global economic anxieties are even more palpable. We’ve long been hearing about a possible recession or even a “slowcession,” as it has been dubbed. A “slowcession” is a term coined in January 2023 by Moody’s Mark Zandi, an Analytics Chief Economist – it refers to a sluggish economy where growth stagnates, but a full recession is avoided.
During a recession, money management and sound economic decisions are more critical than ever. But what about during a “slowcession”? Even during a “slowcession,” associations are wise to make some key moves to ensure sound finances that can withstand any economic ups and downs.
An article published by The Harvard Business Review said that an organization’s ability to “successfully weather economic shock” was guided by its willingness to act early and focus on building more flexibility.
Here are five moves your association can make to build resilience during these uncertain economic times.
First things first: Batten down the hatches! In other words, you must protect your association’s cash flow. Cash is king, and it’s needed for the maintenance of an association. This means the association should also keep a cash reserve and store it in a high-interest savings account. When the economy is less than stable, protecting cash flow – whether it’s in the form of grants, membership fees or income from other methods – should be of the utmost priority.
Along with protecting cash flow, you’ll want to ensure your association thoroughly reviews its budget. You should know – down to the penny – what are the fixed and discretionary expenses, and how much they total each month. While doing a budget review, note if there’s any place in the budget where cash is flowing but it no longer makes sense to flow there.
For instance, do members have access to certain benefits, like an online portal of some kind that is barely used? Check out where cash is going and if it’s even needed. Perhaps member onboarding experiences can be adjusted in a way that reduces spending, too.
While reviewing the budget, you’ll need to make some key decisions. Is there anywhere you can trim the fat? In other words, what costs can be cut? Maybe that monthly costly social event gets reduced to a bi-monthly occurrence, for instance. Or perhaps the annual holiday gifts in December sent to members are nixed for 2023 and return when the economy is more robust. There are always little tweaks that you can make for budgetary improvement that can yield a healthier financial picture.
Good communication goes a long way with staff and members of an association. Good communication looks like transparency and honesty, along with streamlined messaging. If there will be significant changes to staff or member benefits, for instance, to protect cash flow and reduce spending, communicate that early and often with clear messaging.
Keeping people informed – not leaving them in the dark – builds trust and loyalty. The association’s leadership team should be engaging in dialogue with staff and members. Transparent dialogue shows that you care about them, and you care about the communication health – not just the financial health – of the association and the community within it. Good leaders listen and communicate clearly.
During a “slowcession,” it may be necessary to reduce cash flow drastically if finances have not been appropriately managed, or if some unforeseen expenses occur. To do this may necessitate making cuts to staffing. Layoffs happen (like last year’s tech layoffs), but make sure your association handles any needed layoffs with clarity, kindness, and support.
Staff undergoing benefits changes or reduction of work hours may suffer in the short term, either with their mental health or financial health. It’s important to offer resources to staff that can help them endure these changes with minimal negative impact. Point staff in the right direction for support or assistance or ensure it is provided to them directly by the association. Highlight assistance programs that can benefit staff going through changes.
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