Navigating Choppy Waters: A CEO’s Guide to Staying Agile and Resilient

If you’ve been paying attention to the economy over the past few weeks, you’ve likely felt the shift. The waters are getting choppier. While no one is predicting an outright storm (yet), the heightened uncertainty and unpredictable actions of key economic players—central banks, policymakers, global markets—make it clear: now is the time to prepare.

The economy today is like a ship navigating unpredictable waters. Some days, the sea is calm, but dark clouds are forming on the horizon. The best captains don’t wait for the storm to hit—they make adjustments before the winds pick up. For SMB CEOs, this means balancing optimism with strategic agility, ensuring you have the resilience to handle whatever conditions lie ahead.

Recent economic data further reinforces the need for proactive planning:

• The GDPNow model estimated Q1 2025 GDP growth at -2.8%, down sharply from -1.5% just a few days earlier, reflecting weaker consumer spending and a widening trade deficit.
• The U.S. trade deficit hit a record $153 billion in January 2025, a 25.6% increase from December, likely due to pre-tariff import surges. If tariffs take full effect, inflation could spike by summer, adding uncertainty to business costs.
• Retaliatory tariffs from Canada, Mexico, and China could further erode GDP growth, while past studies indicate tariffs could raise inflation by 0.7% to 1.2% and reduce GDP by 0.2% to 0.6%.
• Consumer confidence dropped sharply from 105.3 to 98.3 in February, and inflation-adjusted consumer spending fell by 0.5% in January, signaling growing caution.
• The ISM index reflects weakening demand, suggesting tariff uncertainty and softening consumer spending are hitting the manufacturing sector.
• The Fed faces a difficult decision: rate cuts could boost growth but risk reigniting inflation (core PCE at 2.6% is still above the Fed’s 2% target), while holding steady could deepen a slowdown.
• Volatility across financial markets reflects heightened uncertainty.

So, what does that look like in practice? Here are 10 critical actions to take now to prepare your business for any economic weather ahead:

1. Preserve & Strengthen Cash Reserves

Cash is your lifeboat. Aim to have 8-14 months of operating cash on hand. Tighten receivables, renegotiate terms where possible, and eliminate non-essential spending. Liquidity buys you time and options. With GDP forecasted to contract and consumer spending weakening, maintaining liquidity is crucial.

2. Manage Interest Rate & Debt Exposure

Higher-for-longer interest rates are making financing more expensive. Lock in fixed-rate loans now, pay down high-interest debt, and avoid overleveraging your business. With rate cuts uncertain and credit tightening, securing favorable financing terms now is a smart move.

3. Strengthen Financial Forecasting & Scenario Planning

Implement a rolling 16-week cash flow forecast and create multiple business scenarios. Build contingency plans so that if conditions change, you already know your next move. Tariffs and inflation increases require businesses to model out different financial impacts in advance.

4. Optimize & Lean Your Business Operations

Now is the time to trim the sails—eliminate inefficiencies, cut underperforming offerings, and invest in operational excellence. Make sure every dollar spent is a dollar that moves you forward. With the ISM manufacturing index showing contraction, efficiency improvements are key to maintaining profitability.

5. Invest in Workforce Resilience & Smart Automation

Keep your team lean but strong. Retain top talent, cross-train employees, and implement AI and automation where it can improve productivity without increasing headcount. Market volatility suggests that automation can be a cost-effective way to boost productivity without adding risk.

6. Deepen Customer Relationships & Strengthen Your Value Proposition

Loyal customers are your anchor. Engage directly with key clients, understand their pain points, and offer pricing flexibility where feasible. Double down on what makes your business indispensable. With inflation pressures and declining consumer confidence, strengthening customer relationships is more critical than ever.

7. Stay Opportunistic—Prepare to Invest When Others Retreat

Economic turbulence creates opportunities. Strong businesses that maintain liquidity will be positioned to buy distressed assets, hire top talent, or acquire competitors at a discount. Despite market volatility, certain industries (like real estate) are showing resilience, presenting potential investment opportunities.

8. Monitor Supply Chain & Trade Risks Closely

Diversify your supplier base to reduce exposure to trade disruptions. Keep a pulse on tariffs, geopolitical shifts, and logistics costs that could impact your margins. With new tariffs on key imports and a record-high trade deficit, reassessing supplier dependencies is essential.

9. Lean on Trusted Advisors & Industry Networks

You don’t have to navigate rough waters alone. Engage with business peer groups, financial advisors, and industry leaders to gain insights and avoid blind spots. Given policy uncertainty, staying informed through advisors and industry networks is invaluable.

10. Project Strength, Stability & Confidence as a Leader

Your team takes cues from you. Stay calm, communicate a clear vision, and avoid reactionary decision-making. Leaders who balance realism with optimism build businesses that last. With increased stock market volatility and consumer uncertainty, employees and stakeholders need to see strong, confident leadership.

Final Thought: "Stay Liquid, Stay Nimble, Stay Focused"

The best captains don’t panic when the winds shift—they adjust their sails. Whether we sail into a slowdown, a mild downturn, or simply continued uncertainty, those who prepare today will be the ones best positioned for tomorrow’s opportunities.

History has shown that businesses that take decisive, proactive steps not only survive economic turbulence but often emerge stronger, leaner, and better positioned for future growth. The key is resilience, strategic foresight, and the willingness to adapt.

If you’re looking to better understand how to navigate an economic storm, check out this Arete Coach Podcast episode on "10 Things to Take Into a Hard Recession." Watch it here.

We’re not forecasting a recession, but the underlying conditions have shifted in a serious way. Smart leaders prepare—not out of fear, but out of wisdom. How will you adjust your sails?

The best captains don’t panic when the winds shift—they adjust their sails. Whether we sail into a slowdown, a mild downturn, or simply continued uncertainty, those who prepare today will be the ones best positioned for tomorrow’s opportunities.

What’s your take? How are you preparing your business for the uncertain waters ahead?