Michigan’s economy moves through cycles of growth, slowdown, and recovery. Business leaders who plan for these shifts may be better able to handle downturns while also positioning their company for long-term success. Luckily, you don't need a crystal ball to prepare effectively. Economic forecasting for businesses is less about predicting the future and more about watching for signals and being ready for change. Below are some practical steps that may help your business stay steady through the ups and downs.
Key Signals That May Point to Shifts Ahead
By spotting early indicators of economic change, you may be better able to prepare for business slowdowns and cash flow disruptions. Key signals to watch out for may include:
- Consumer spending patterns: Look for dips in consumer spending, slower sales, declines in foot traffic and bookings, and client payment delays. These signs could indicate customers are feeling cautious about spending or struggling to keep up with bills.
- Supply-chain challenges: Price spikes for raw materials, rising import and export costs, freight delays, and other issues in supply chains could signal future manufacturing slowdowns.
- Interest rates and credit conditions: Rising interest rates and stricter lending criteria could make borrowing more expensive for businesses, potentially reducing their access to capital for investments and day-to-day operations.
- Regional indicators: The manufacturing and auto industry anchor much of Michigan’s economy. Changes in activity, employment, and consumer demand may provide early clues to the health of Michigan’s economy in the coming year.
4 Proactive Steps That Could Keep Your Business Steady
Knowing what may be coming ahead is only helpful if you take action based on that information. For commercial and industrial leaders, small businesses, and other organizations, taking the steps below may help you safeguard your business during times of economic change.
- Run “what if” scenarios: Simulate different scenarios to see how well your business can adapt to financial challenges, such as a 10% sales decline for three months or a 15% price spike in raw materials.
- Keep cash within reach: Consider checking your cash reserves and credit access to see how long you’d be able to cover payroll, rent, and supplier payments under your “what if” scenarios. Also look for backup money sources, like business credit cards, that can help bridge short-term cash flow disruptions.
- Diversify suppliers: Find alternate suppliers to avoid over-reliance on a single vendor.
- Review your loans: Check your local bank to see what your options may be on existing loans. If you ever need more breathing room, you could consider those options to help free up cash flow.
Michigan business economic outlook: Looking Ahead with Confidence
Economic fluctuations are a normal part of economic cycles. Taking advantage of the good times and being prepared for the times of slowdown may help you maintain your business’s financial stability. Leaders who watch for early signs of change may be better poised to pivot, weather, or seize new opportunities, even during challenging periods.
Northstar Bank’s team is here to show you where you may be able to strengthen your business’s financial resilience. Speak with one of our bankers today to discuss strategies for navigating changes in Michigan’s economic climate.
