Preparing Your Company for Survival through 2009
SAN DIEGO (Oct. 9, 2008) — The balloon has popped. The bubble has burst. Someone left the door open and the chickens have fled the coop.
Just when you think it can’t get worse, the U.S. economy takes another downturn. The stock market has plunged and can't seem to sustain any kind of meaningful comeback. The financial crisis is regular front-page news. Main Street companies are tightening their belts. The Federal Reserve Board announces an emergency half a percentage point interest rate drop and more cuts may be needed.
The questions for Main Street CEOs and business owners --- how deep will the downturn go, how long will it last, and what can you do to stay in business?
To prepare your company through 2009, Vistage International speaker Brian Beaulieu, an economist with the Institute for Trend Research, recommends the following:
- Set conservative budgets so you don't hemorrhage cash.
- Build in as much financial liquidity as possible.
- Work with your lenders to get as much credit as possible. Strive to maintain a 10 percent margin for error with your financial covenants.
- Prepare a comprehensive cash flow forecast that includes best- and worst-case scenarios.
- Scrutinize every job in the company to determine which ones are essential to the core business and which to cut.
Once you have these defensive strategies in place, think about how to position your business to take advantage of the economic upturn.
When faced with the specter of recession, the first instinct of many CEOs is to race to the woodshed, sharpen the ax and start cutting. Beaulieu recommends a less dramatic approach.
"Don't panic or overreact to the situation," he cautions. "At the same time, don't stick your head in the sand, thinking you can skate through untouched. Nobody can predict exactly what will happen with the economy, so it pays to adopt a defensive posture."
According to Beaulieu, the changes the government is making are encouraging, but he believes we’re still in for a
long 2009.
"My advice to business owners is, 'You ain't seen nothing yet,'" says Beaulieu. "By taking advantage of other people's pessimism and mismanagement during the downturn, you can reap the rewards for years to come."
For information on executive coaching organization Vistage International, visit http://vistage.com/about-us.html.
To download a free economy report, visit www.vistage.com/economy
Contact: Lois Arbogast, Vistage International- 858.509.5861