An Economy In Decline: A Business Owners Survival Guide – Part 2

This article is a continuation of our previous An Economy in Decline: The Only Business Owners’ Survival Guide You Desperately Need to Read. If you haven’t read it, we strongly urge you to do so before continuing to get a deeper understanding of this article.

We touched on developing a regimen to protect your people. Now, let’s discuss the methods you should take to protect the integrity of your business and your liquidity.

Protecting the Integrity of Your Business

Sales and Marketing Strategies:

Develop a plan for developing new business opportunities with current customers and hunting for new ones.

Tough economic times will allow for some unique opportunities for finding new customers, re-establishing business with past customers, and arranging for new terms beneficial to the business. Be sure to take advantage of opportunities like this.

You must be the initiator of business. Only the most aggressive businesses are able to capitalize on these opportunities. Be relentless in your pursuit of new business opportunities and strategies.

Pricing/Costing (including overhead allocation)

This is a challenge for most small business owners, even in good times.

Determine the correct pricing formula, even in a volatile economy, that affords you the best opportunity for maximizing profit.

Productivity Reporting/Metrics

Build and implement objective reporting metrics to get improved efficiency and productivity from your people and operations, and determine how to drive accountability utilizing these metrics.

Hold your people to a higher standard of performance: In times like these, having a higher level of expectations and demand for performance may be the difference between survival and going out of business.

Develop sound reporting metrics to help you accomplish your goals, and review the performance of your managers regularly.

Supply Chain Management

Set up a communications regimen to ensure that your suppliers become partners in the success of your client’s business. It is in your supplier’s best interest that they work with you through this, and all parties come through on the far end.

Protecting Your Liquidity

Cash Management/Forecasting

Build a cash forecasting model with the goal of:

• Stabilizing the business and ensuring no worse than cash neutrality in the short term, then…
• Ensure that the business is consistently cash positive, then…
• Utilize the forecast as a cash-based profit & loss statement to improve upon your forecasted cash projections. Finally…
• Prepare a cash profit & loss statement weekly.

Operational Expense Reduction:

Utilize the cash forecast

Develop a cash management plan designed to ensure your business is stable in the short-term, and is cash positive in the long-term.

Review all operational expenses

Go line-by-line through your profit & loss statement to identify unnecessary and unproductive costs. Perform the same exercise through your bank statements and check registers.

Communicate & execute your cash management plan

In this impacted world of inflation, rising interest rates, labor challenges, and covid-19, being able to reduce cash outflow can be the different between weathering the storm and going under. Ensure your people are aware of the plan and are held to it.

Protect Your Way to Victory

There is no telling what lies around the corner for your business, no matter the economic state we’re all in.

At American Management Services, we believe every owner should develop and formalize a business plan; not planning can spell disaster if you’re hit with uncertainties.

Placing emphasis on protecting your people, integrity, and liquidity–and building that into your business plan–can lead to surviving almost anything that comes your way.

Developing a plan isn’t easy, but if you need guidance, be sure to follow me here on Forbes or click the links to my social media pages.