As a busy business owner, staying focused and on track can be challenging, especially with so many...
Simple Steps in an Uncertain Business Environment
Summers are short in Michigan, and it is easy to get caught up in the great weather and miss the warning that a season change is coming.
Just like Mother Nature, businesses have seasons. Accelerated Growth, Slowing Growth, Recession & Recovery. As the Federal Reserve raises interest rates, most industries are entering a new season of slower growth than we have experienced in the past few years.
Here are some simple steps to help you create a soft landing and to position you to capitalize when the season of growth arrives.
In uncertain economic times, it is BACK TO BASICS. Here are 4 Simple Steps to take advantage of uncertain times. If you find these steps helpful, please give us a thumbs up, comment below, or subscribe.
Step 1: Review your relationships with stakeholders
Customers
- Are your Customer Service Levels where you want them to be - your best customer is an existing customer - do not lose them because you forgot about them or did not treat them as IMPORTANT!
- Which customers are contributing to your profitability? Conversely, which customers are not profitable?
- Review pricing and products. What impact will a slowing economy have? Do you have the right product mix for this new season?
Vendors
- What payment terms are available that you are not taking advantage of now?
- Review products and services. What is essential, and what is nice to have?
- Review purchasing contracts, especially auto-renewals, and negotiate exits or concessions for shifts in the economy.
Financing
- Review your borrowing documents to ensure that you are in
compliance with all of your stated covenants.
- Network with key people from a variety of financial institutions. Access to capital is critical in shifting markets. The easiest time to borrow is when you don't need it.
- Review your fees. Banks constantly update fee structures to attract new customers. Make sure you are not overpaying.
Step 2: Review Your Operations and Improve Efficiencies
Policies and Procedures
- Are you enforcing payment terms to your customers?
- Do you have the supporting documents for claims, liens for goods, property, or services?
- Are you billing for all the items that are owed to you?
- Is your invoicing done on a timely basis? If you offer terms, are customers aware, and are they taking advantage of them?
- Are your receivables being collected on a timely basis?
Step 3: Reduce Cost
Check Insurances
- Review policies to ensure you have appropriate coverages for current business activities & assets.
- Review to see if you can reduce premiums by adjusting coverage and/or changing deductibles.
Review Budgets
- What expenses change when business slows? Travel, Celebrations, Operations
- Do a SWAT analysis with your staff. Stop Waste And Think. What can they do without?
Step 4: TAKE ADVANTAGE OF THE OPPORTUNITY
BANKS
- Are you getting benefits for all of the depository relationships?
- Lock in low-interest rates and extended maturities.
- If you have no debt - establish a borrowing relationship. It is the easiest time to borrow funds is when you do not need the money.
- Negotiate the most favorable terms and payment schedules
ASSETS- Are they being utilized appropriately?
- Can they be leveraged as collateral for borrowing relationships
- Do you have any assets that can be disposed of that do
not have a material impact on the business today or in the
future? Can you obtain assets below traditional market costs?
VENDORS-
- Negotiate favorable payment terms
- Take advantage of all extended payment terms.
- Taking advantage of all discounts available for prompt
payment(s) of invoices - Is expense sharing available with your vendor i.e. tooling
costs? If so, are you getting or billing for the appropriate credit?
I work with inspiring, successful, hardworking people who embrace change, dream big, take risks, and never settle. Helping privately held businesses build transferable wealth brings value to all stakeholders and allows them to live more purpose-filled lives. Take advantage of a complimentary discovery meeting to see how we can help you overcome your biggest challenges and live your ideal life. Click Here.