U.S. recession concerns are rising as markets suffer from tariff-driven uncertainty, consumer sentiment sinks with increasing prices, and, while the March jobs report was up over February, some economists warn that higher tariff-related unemployment could be on the horizon.  

Pinpointing a recession is technically done by looking back on two quarters of GDP decline but economists say conditions are ripe for the U.S. to head toward at least an economic downturn. Instead of panicking with quick, short-term reactions, distributors will be better served by focusing on readiness and resilience. 

Whether an actual recession develops or not, there is plenty of market uncertainty and worry. It may seem safer to ride out the volatility by waiting for better times or worse, spin up reactive responses to the changing news of the day. But savvy distributors have learned this is the time to reassess current practices and keep the focus on long-term profitability.  

These ten steps will recession-proof your business and prepare it for any market disruption.  

1. Don’t panic. Instead of fretting over rising costs and sinking customer sentiment, concentrate on the value and strategic advantages you provide for your customers and partners. Consider how you might boost value rather than dropping your price to grab market share and starting a price war. Tighten the belt, cut back where necessary, and implement transparent tariff surcharges where appropriate, but don’t panic.  
2. Focus on the fundamentals. Prioritize your profitability. Reinforce your core offerings, innovate, and make the investments in people, process, and technology that you haven’t had the time to make before now. Your best defense is a good offense. 
3. Think long-term. If the organization’s response to tariffs and a looming recession is only with the short term in mind, things may look fine for now. But cutting prices and offering discounts today will likely have a negative impact on the long term. Conversely, you may miss low-hanging opportunities if you’re fixated only on long-term viability. The best case is to focus on managing your long-term strategies with a balance of a few purposeful, short-term directives to get through. 
4. Diversify. Diversity practices protect all revenue streams from being impacted at once. For example, new equipment sales and add-on services usually cycle at different times. Consider diversifying key areas of your business, including your customer base. It’s likely that most customers won’t be affected by disruption to the same degree, at the same time. Implement diverse pricing strategies that suit different customers.  
5. Gain a deeper understanding of your customers. If your business is going through hard times, your customers likely are too. Rather than cut process because there’s a storm on the horizon, understand the needs-based and psychological buying data for your products. Why do your customers purchase your products? What void or need do your customers fill in good times and bad? Is your product easily replaced by a cheaper competing product? How recession-resistant are your customers? How do your products help your customers create value? Answering these questions will help your product and pricing teams better plan and implement strategy changes.  
6. Consider your products’ perceived value. This is an important follow-on to the point above. Stay close to any changes in your product’s perceived value and reflect that in your pricing accordingly. History tells us a recession can drive down value or it could increase it. What key market dynamics have changed? Consider how different customers use the same product and how their use might have changed. Devise a pricing strategy and plans for changes if perceived value and key market dynamics change.  
7. Focus on value-based pricing. In a downturn, customers naturally become more price sensitive. Distributors should not react to this by slashing prices. This could hurt brand positioning and/or start a price war. Instead, implement a value-based pricing strategy that segments customers based on willingness to pay.  
8. Rationalize your customer book of business. Now is the time to get your financial house in order. In addition to addressing superfluous spending and keeping a cash buffer while securing long-term lines of credit, focus on your customer book of business. This requires visibility to actual pocket margin to understand who makes you money and who is a drain on your company. Find a way to serve marginal customers profitably or reconsider the relationship.  
9. Uncover revenue and profit leakage. It’s natural to either preserve volumes by discounting prices or offset costs by increasing prices during a downturn. But there is another option. Keep the current price levels by removing the non-essential features that defend profitability by preserving volumes or unit margin. Also consider where you have revenue and profit leakage and where you may be leaving money on the table. You may have previously included service or availability levels that now should be “unbundled” and clearly itemized on invoices. 
10. Be flexible and agile. Flexibility and agility are the hallmarks of organizations that effectively navigate recessionary times. Having real-time market data and reacting accordingly is a real benefit. In market conditions where demand has softened, it will be important to be competitive on price to ensure you are winning your fair number of deals. However, in a highly inflationary environment where supply remains scarce, ensure you don’t leave money on the table by appropriately pricing your products to maximize margin. Both are feasible scenarios. Both could co-exist in the same corporation but in different business lines. The ability to rapidly shift pricing and use real-time data to guide decisions will be critical to maximizing both scenarios. 

Preparing for Change 

Even the very best economists can’t predict the future. The best way to prepare for a possible recession is to enable your organization to respond quickly, whether opportunity is shrinking or growing. A baseline focus on pricing agility will allow you to respond in real time, which is really the only 100% effective tool available to prepare for and weather change.