As a San Antonio-based accounting and advisory firm, we know firsthand how today’s economic environment is testing businesses, especially nonprofits and government contractors. From reduced federal funding and evolving regulations to inflation, tariffs, and supply chain disruptions, economic uncertainty has become a constant.
In times like these, the ability to plan ahead and understand your exposure is the first step towards maintaining long-term stability and growth. Here’s how organizations are assessing risk and the steps you can take to stay resilient in the face of change.
Why Economic Uncertainty Matters for Your Business
Economic uncertainty isn’t a short-term challenge; it’s an ongoing reality. Shifting fiscal policy, rising interest rates, inflation, and global supply chain volatility are creating challenges for organizations across every sector. While the impact varies, some common challenges are surfacing.
Government Contractors
Federal and state budget constraints can lead to project delays, cash flow interruptions, and contract modifications– all of which can make it difficult to plan with confidence.
Nonprofit Organizations
Inflation and funding cuts are reshaping donor behavior and limiting access to public dollars. Many nonprofit organizations are now navigating rising costs with fewer unrestricted resources.
For-Profit Businesses
Higher input costs due to tariffs, inflation, and interest rates are becoming more common, leading to reduced consumer spending. Due to this, margins are being squeezed across the board. For small and midsize organizations, this can create major strain and strategic paralysis.
No matter your industry, understanding how external forces affect your operations is the first step towards staying prepared and planning confidently.
High-Risk Sectors: Who’s Most Exposed?
While all businesses face economic pressure, some sectors are more vulnerable due to policy and economic changes. If your organization falls into one of the following categories, a proactive approach is key.
Contract-Dependent Organizations
Organizations that rely on government contracts are particularly vulnerable to federal and state budget tightening. Delays in contract awards or payments can quickly impact cash flow, and fixed-price contracts leave little room to adjust for rising material and labor costs. Compliance updates, such as the Corporate Transparency Act, add another layer of complexity, demanding both strong financial oversight and expert advisory.
Mission-Based Organizations
Mission-driven organizations are particularly exposed to shifts in both public funding and private giving. Reductions in federal grants or shifts in donor contributions can jeopardize program continuity, while operating costs continue to climb. With increased audit and compliance oversight, many nonprofits are being asked to do more with less, making financial agility and planning essential.
Import-Reliant and Product Businesses
Companies dependent on global supply chains face risks from tariffs, trade policy changes, and shipping delays. Port congestion and geopolitical instability can disrupt inventory flow and drive up costs almost overnight. Without diversified suppliers or inventory buffers, these disruptions can quickly escalate. In today’s climate, resilience starts with a forward-looking supply chain strategy.
Practical Steps to Build Resilience
Economic challenges are real, but they also offer opportunities to streamline operations and strengthen your financial foundation. Here are five ways to build resilience and stay ahead of potential disruptions:
Reassess Cash Flow and Scenario Plan
Start by reviewing your cash flow and identifying your break-even point. Develop forecasts to model potential revenue drops of 10 percent, 20 percent, or more. Planning for multiple outcomes helps you make timely, confident decisions before the pressure hits.
Diversify Revenue and Vendors
If your organization relies heavily on a single supplier or funding source, now is the time to diversify. Government contractors, for example, might consider adding state or local opportunities alongside federal work. Evaluate vendor risk and consider shifting to domestic or more flexible suppliers to reduce exposure to global disruptions.
Strengthen Budgeting and Reporting
Use real-time financial data, monthly budget-to-actual reviews, and rolling forecasts to stay agile. Clear visibility helps leadership respond quickly and accurately as conditions shift.
Negotiate Payment Terms
Talk to vendors and clients about extending payment windows or securing early-pay discounts. Even small adjustments can improve cash flow and build goodwill with partners, both of which are essential during uncertain periods.
Take Advantage of Available Credits and Relief
Many businesses miss out on valuable tax credits and incentive programs, including those tied to hiring, energy efficiency, or underserved communities. Work with your CPA to identify and take advantage of opportunities that support your strategy.
Work With Accounting Advisors in Texas Who Understand Uncertainty
At Badger CPA, we work with businesses and nonprofits that rely on strategy and planning to navigate complex financial situations. From federal compliance to cash flow forecasting, our team helps clients understand their numbers and make better decisions during times of change. Now is the time to get focused and build a plan that works–together. Schedule a call with our financial experts or email us at info@badgercpa.com to get started.