Post # 300! Its time to act, it is clear our economy is in for a rough ride.There is much you can do to protect your business.

Yes we have been waiting for the second shoe to drop. Whether or not the Bail Out plan will succeed in propping up our sagging economy?  Now that the Bail Out Bill has been passed by Congress and signed into law, while we may not be certain what the specific rules and practices may end up being, we know without question what the results will be.

The best economic minds in the country (not Congress or the President) have universally declared the Bail Out legislation is unlikely to prop up our credit market. We are in for a rough few years as our economy fights an up hill battle on the proverbial slippery slope, sputtering and clamoring for growth and expansion while held back by severely hindered credit markets.

This means there will be fewer mortgages underwritten, fewer cars purchased, lines of credit will be severely reduced or eliminated, and new start ups will have a very difficult time acquiring necessary capital. Without a robust credit market, our economy must learn to run on cash…a difficult pill to swallow and one that will take years to adapt too.

So the operative questions are:

1. Can we as individual business owners do anything about this?

2. What should we be doing now in preparation or in response to this situation?

The answers are unique to each business owner but generally here are the areas you must be considering.

1. Depending upon your industry you may want to evaluate your core business and focus on the more profitable aspects. You may want to consider downsizing,  postpone capital investments, reduce payroll, reduce overhead etc.

2. Perhaps the issue is credit. This can be dealt with in many subtle ways, by dealing with your supply chain, your customers and your overhead issues. Cash is frequently locked up in inventory and receivables which can be adjusted. Critical credit requirements may be satisfied as a function of business terms and conditions from both your supply side and your customer base. Open up terms with your supply side, shut down terms on your customer side…without losing profitable business. Challenging , yes but each adjustment provides additional momentum.

3. Joint ventures and sub contracting, may become more important to you as you focus on exactly what makes you money and what you specialize in doing well. Partnering with others expands your potential without requiring  large investment or risk, no increase in expensive payroll, yet increased revenue and profit.

4. Exploiting your competitive advantages is critical, knowing what they are  and identifying them to the public even more important. Creating competitive advantages is an important strategy.

5. Expanding your customer base geographically through inexpensive Internet marketing may be a distinct possibility. Recall the local farmer in Italy who can now sell the highest quality olive oil to a restaurant distributor in New York at a huge margin, avoiding all the middle men, because of the Internet. (Read the Long Tail post in this blog about this phenomena).

While we contemplate re-inventing ourselves and the way we will be doing business, the most important exercise we can engage in with the greatest likelihood of immediate results that will support stability and growth, is a major review of your business organization, operation and implementation, increased productivity is the objective with increased profits the result.

In other words, are you running your business mean and lean, efficient? Do you have appropriate controls which you are monitoring daily, key indicators I call them, tracking performance, profitability, revenues, and supporting management decision making?

Are you training your employees, and providing career paths for them? Are you aware of the relationship between employee costs and profit? Have you installed an incentive based reward system? Are you monitoring productivity?

As we are being pressed to the wall with various business and economic challenges, it is even more crucial that we run our businesses with precision. This we can control. If we maximise our internal capability, we can deflect external variables far more successfully.

Therefore, while we cannot do much to change the realities of today’s economic down spin, while we may not be able to create new lines of working capital credit, we can operate our businesses in a way most likely to survive and flourish as we re-invent our business parameters and make very certain we are operating efficiently,  productively and profitably.

We must review our business practices and then get expert assistance to fine tune and install the necessary business systems that will yield the best results with the least cost, supporting stability and yes even growth and development is possible , even under such trying times..

This we can do, and in fact this is the basic responsibility of the business owner. Plan, train, and review… and then make the best decisions possible for your company.

If the pain is deeper and a direct result of overburdening debt, then pre-emptive workouts are in order, addressing excessive debt before it sucks all your capital out preventing any further development. Debt is the killer and must be viewed with a new perspective, in this new economy,  without credit, debt could be the killer of many businesses. Pre-emptive workouts…call me to discuss.

We can make the difference you need to not only survive but to flourish in this extreme situation. Do not wait, you must make major changes as soon as possible to stem the losses and increase profitability.

Call me I can help you make these changes 413-549-2966. Norm will set up a no obligation teleconference to discuss your options.