Daily on CNBC another well-known economic pundit hints at the possibility of a recession. This week’s “recession-sentiment warriors” included the great Warren Buffet and the consummate innovator Sir Richard Branon, Chairman of the Virgin Group. Moreover, most economic pundits now believe that we will experience an economic slow down with some sectors being hit harder than others. While there are still a few lingering questions, enough compelling data exists to suggest that companies should engage in some strategic counter-recession planning.

Officially, a recession is defined as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales” (National Bureau of Economic Research). A recession is only officially recognized when the (NBER) declares it to be so. Whether or not we are actually in a recession is really a mute point when making real-time business decisions. Business owners shouldn't wait for historical data to take the critical steps that will be needed to weather the economic storm. So, the real question becomes what to do in an economic slowdown—if you are an institutional or individual investor or a CEO of a large or a privately held company. The applicable answer: Define the fundamental economic position by analyzing your industry, company, customer base, cost structure, debt leverage and retained earnings.

All industries are not created or destroyed equally, and some companies are better positioned for economic uncertainty. To analyze each industry, evaluate the economic impact on its customers and suppliers if a slowdown were to occur. If the conclusion is troubling—accept the inevitable and perform an analysis to determine the ability of your company to adjust to the evident economic impact. This involves a review of the cost structure, debt leverage and retained earnings.

The cost structure identifies the profit margin and your company’s ability to absorb overhead cost. Higher margins allow greater cost flexibility. Additionally, a reduction in overhead may be easier than cutting production cost, especially if inflation is competing factor.

The balance sheet will reveal your debt leverage and the strength of your borrowing power. Retained earnings examine the past performance of your business model and your management team. If the retained earnings tell a story of past negative growth, the business model's ability to take an additional hit will be questionable at best.

In the case of a company with less favorable financial position, innovation may be the only solution. Since negative growth and declining retained earnings impact the balance sheet and reduces a company’s ability to obtain debt or equity investment, your company may need to form a strategic alliance or joint venture to allow reorganization without a substantial reinvestment of funds.

We may be heading for tough economic times and, no doubt, some companies will not survive the squall. However, there are many examples of companies that have escaped disaster through leadership and vision. It's no secret that markets trade on sentiment and the “mood” can lift or pummel the economy. In times of economic uncertainty, your preparation and strength of will are genuine assets.