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By Fred Castrovinci
First Senior Vice President, New Jersey Regional President
Valley Bank

Businesses need consistency and predictability to achieve success. However, today’s turbulent economic environment is creating uncertainty and turmoil for many New Jersey businesses and organizations especially warehousing, car dealerships and importers. People are very concerned, but there has always been resiliency in American business and many in New Jersey are confident that they are well positioned to survive and even thrive.

In a survey Valley conducted of middle market businesses at the end of last year, 90 percent of the respondents were expecting 10 percent growth this year but they expressed concerns about

geopolitical tensions and trade policies, technological innovation, supply chain issues, interest rates/inflation/consumer spending, and wage pressure. Now, just a few months into the year, financial experts are talking about a higher inflation and a potential recession.

While it is difficult to predict the future (near or long term), owners and leaders should take proactive steps to navigate this challenging time. It is critical to understand how your business can be impacted by the current environment and determine what you can do to anticipate what the impact will be.

To manage in this turbulent time, you should hope for the best but plan for worse case scenarios including a recession. Businesses should create a playbook that can be used as a guide to ensure you are taking the right steps to achieve success. Areas of focus can include:

Leadership. Strong and thoughtful leadership is essential to navigate uncertain and turbulent times.  Your customers and employees are relying on owners and top management to set the strategy and tone. Have an open door policy for your employees, be empathetic and listen to their concerns. Relationships come into play now more than ever so communicate frequently with your customers and clients so that you stay top of mind.  Keep in close contact with community partners and vendors, especially those overseas, and work out risk sharing agreements.  Talk with your banker – be honest and keep them apprised of your situation – both positive and negative.  We can handle problems, but do not like surprises.

Business Planning. Show the ability to pivot, be innovative and evolve your business model. Look at ways to reimagine your business including expanding into new segments such as adjacent industries to yours. Identify new services you can offer that differentiate you from the competition. Think back to how you managed during Covid and see what you can do to replicate that now.

Cash and Expense Management. Proactively evaluate and manage expenses – look at where you can cut costs without negatively impacting the business and see what you can domestically source. Stay on top of your 12-24 month expenditures and strategically restructure costs now but be careful not to eliminate key people or services that are essential to maintaining growth. Diligently manage liquidity and the balance sheet, staying focused on customers. Establish cash management best practices in advance of a possible downturn including integrating cash flow forecasting into profit and loss outlooks and scenario modeling. Streamline processes and automate to become more scalable for growth.

No one has a crystal ball to predict how long the uncertainty will last, but companies and organizations that take the steps to plan and navigate the turmoil have the best chance to thrive.

Fred Castrovinci is a trusted leader in the banking industry with over 24 years of experience. As New Jersey Regional President of Commercial and Business Banking for Valley Bank, Fred oversees commercial banking operations and strategy for the region, delivering tailored, conservative financial solutions with a commitment to developing meaningful relationships and community connectivity.

[Valley Background]

As the principal subsidiary of Valley National Bancorp, Valley National Bank is a regional bank with nearly $64 billion in assets. Valley operates many convenient branch locations and commercial banking offices across New Jersey, New York, Florida, Alabama, California, and Illinois and is committed to providing the most convenient service, the latest innovations and an experienced and knowledgeable team dedicated to meeting customer needs. To learn more about Valley, go to valley.com.

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