While many of our clients and other business owners who I talk to seem to be upbeat as their businesses are enjoying growth and increasing profitability, most, like me, also have a nagging concern about the economy.
Consider the unpredictability of the stock markets, the European Debt Crises and the uncertainty in our own Federal Government’s debt, regulation and the outcome of upcoming elections. I read economic reports and forecasts and find about as many opinions are there are forecasts made. In the fact of this kind of uncertainty, it is easy to have a “deer in the headlights” reaction – in other words we do nothing because we aren’t sure about how the results of a given action will impact the future.
This concern is completely understandable, but it is the exact opposite of what small businesses need to be doing right now. I recently read a great article on Forbes that provides excellent guidance on what you can and should be doing to prepare for a potential economic downturn and at the same time, moving your business forward in very deliberate and positive ways.
In his article, Chris Carey outlines “10 Ways to Risk-Proof Your Company”. He starts by focusing on conserving cash and shoring up your lending relationships – this is sound advice. We learned in the last recession that businesses that had cash reserves and access to lines of credit not only survived the downturn but also were able to grow their market share while their competitors suffered – I believe that similar opportunities will exist again – if you are prepared to execute.
Mr. Carey also advises small businesses to carefully control expenses and capital expenditures – this includes the spending habits of the owners as well as finding ways to turn historically fixed expenses into variable expenses (think outsourcing and rent vs. buy) – this reduces your breakeven level and gives you more flexibility in extremely difficult situations. He also reminds us that we need to review and re-engineer business processes (i.e., get the complexity out of your organization and make it easier for your team to execute) and to make sure that we have access to timely and accurate [useful] information about our business so that you can make decisions with confidence.
I support his ideas and recommend that you read the full article. You can find it here: http://www.forbes.com/sites/chriscarey/2011/09/28/10-ways-to-risk-proof-your-company-for-the-coming-downturn/2/
There are reasons to be positive and act with confidence. Good luck with your business – let us know if we can help!
Kent Thomas
