A sudden economic downturn is depressing our current numbers just as we are starting our exit runway, and my partners are panicking. How do we separate this macroeconomic shift from our actual operational problems so we do not slash our target valuation?

Question

Tyler Smith · Accepted Answer

It is critical that your leadership team distinguishes between a predicament and a problem during this economic downturn. Keith Cunningham teaches that a predicament is an environmental factor that you cannot control, such as a macroeconomic recession, rising interest rates, or sudden regulatory shifts. A problem is an unanswered question with viable operational solutions. Panicking about a predicament wastes valuable mental energy and leads to emotional, value-destroying decisions. Instead, schedule uninterrupted Thinking Time with your partners. Use the framing: How might we adapt our operational model so that we can maintain our margins despite the industry slowdown? Once you isolate the predicament, focus your leadership team entirely on the operational problems you can control. Bring these challenges to your weekly Level 10 Meetings and use the IDS process to solve them. Can you optimize your pricing, trim underperforming assets, or use AI tools to automate back-office operations? Adjust your V/TO targets to reflect the new market reality while documenting exactly how your business is successfully mitigating the downturn. When you eventually present your business to buyers, you can show them how your disciplined execution protected your margins during a recession. This proven resilience actually increases your valuation, as buyers will pay a premium for a business that can thrive in a hostile economic climate.