Things have been going well of late economically. However, we cannot become complacent. If nothing else, the recent stock market gyrations remind us to be fiscally sound. Some of the industry consolidations are not a coincidence!
This is not a Chicken Little the sky is falling scenario. And if you are really concerned, please ask me for our “The Man Who Sold Hot Dogs” parable and bookmark.
If we do head towards a downturn, CASH IS KING. Proper planning can be a lifesaver. During this process, there cannot be any sacred cows. You must evaluate everything.
From a P & L perspective, how can you maximize revenues? You want a greater share of wallet. And watch your expenses closely. During good times we can fall prey to “fat, dumb and happy”.
From a balance sheet perspective, how can you convert assets into cash? How can you manage your liabilities better? And can you raise capital to withstand some financial challenges?
For all of the above, start with your internal team. Ask them for ideas/suggestions. You would be amazed by their creative contributions. They live in the trenches daily. I am constantly amazed at the contributions from my team. Don’t overlook them.
I would be hard pressed to give you other revenue-raising ideas. Our industry is blessed with some great marketing minds who share ideas, including the posts in PromoCorner. Identify your best accounts, and do all that is necessary to keep them. Do not take them for granted. And take some time to find new good accounts. Maybe some of your competitors are not adding the right value or are cutting back. Now is not the time to cut back.
Watch every expense. Are they necessary to your success? Often these items just “grow on their own.” For example, my email blast and digital marketing was non-existent five years ago. I am now into it for thousands of dollars a month. I constantly have to evaluate the worth of these expenses. An old saying - “60% of our marketing budget is a waste of money. If we only knew which 60%!”
Convert assets into cash. Manage your A/R. Fall out of love with slow-moving inventory. Are there any fixed assets you no longer need or can outsource more efficiently? Do you need that new car or house now? You can’t make payroll with money tied up in equity of a house, car or other fixed assets.
Did you consider paying your trade with credit cards? You immediately get a 30 - 45 day extension of the due date. Yes, it may cost you a modest fee, but no liquidity is a lot more expensive than a small processing fee. Have you negotiated the best terms with your vendors?
Do you have a line of credit to manage your cash flow? Meet with your banker or factor now. On sunny days banks give you an umbrella. On rainy days they want it back.
As an owner, you benefit from the long term survival of your business. Are you mentally prepared to invest money into your business to ride out any storm?
Get the right advice and save your most significant long term investment. Besides your staff, speak with your financial team – banker, accountant, even your lawyer. Now is the time to be prepared.
CASH IS KING.
A 1975 graduate of the Wharton School at the University of Pennsylvania, Harvey enjoyed a 20+ year career in commercial banking, exercising his “golden parachute” in 1996. In his volunteer life, he is a past chair of the Small Business Banking Unit of the American Bankers Association, Easter Seal Society of New Jersey, the SAAGNY Foundation, PPAF EXPO, and Supplier Committee of PPAI. He is also a past President of PPAF. PPAI awarded him the H. Ted Olson Humanitarian Award in 2013.