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8 WAYS TO SURVIVE AN ECONOMIC DOWNTURN

Advance planning and preparation for an economic downturn will increase your company's chances of survival, giving you that edge over your competition.

Canadians have enjoyed seven years of economic growth since the usurious 80's and once again the thunderclouds on the economic horizon are looming of another downturn. Nervous investors and entrepreneurs alike are tightening their belts, looking ahead to leaner, tougher times. The threat of tighter purse strings, higher interest rates and more stringent collateral requirements are but the ominous portents of impending bankruptcies so rife just a decade ago.

But this need not be so. For the strong, versatile, flexible and adaptable this can be a time of challenge and excitement. Experience and skills acquired during these times are invaluable resources in developing defensive and offensive marketing strategies, more unique and creative brainstorming in the realm of business acumen for sharp-shooter skills in a business' rise to dominance.

1. LABOUR RE-EVALUATION

The workforce comprises a significant capital outlay in any business operation. However, this need not necessarily be a fixed aspect of time-consuming labour. Reduce bookkeeping and payroll maintenance by contracting the work out to businesses specialized in these areas. This will free up valuable time for the accounting division, enable the flexibility of part-time labour or of a reduced work-week. Consider the options available through the expertise of freelance operatives, non-existent benefits and a pay-as-you-need schedule. Or consider reorganizing the system with a job-sharing program.

2. LEASING AS AN ALTERNATIVE

Many individuals and companies turn to leasing as an alternative to capital expenditure, or down payments, as a method of financing the use of vehicles or equipment over a specific period of time. The exorbitant cost of some assets has encouraged individuals and businesses to consider leasing as a preferable alternative to ownership. In effect, inflation is being offset by paying tomorrow at today's prices. Through this medium, the lessee is able to enjoy the full and exclusive use of the acquired asset while receiving possible tax benefits and savings. Lines of credit, working capital and cash reserves are preserved for other needs.

3. ESTABLISH A NEW MARKET NICHE

A good point to keep in mind is that a downturn affects everyone; including your competition. By keeping tabs on your competitors and their downturn implemented policies, you may discover a deficiency in a product line, service, availability or accessibility. This would be the perfect time to claim new territory and gain a new market share.

4. CLEAN UP ACCOUNTS RECEIVABLES

In a weaker economy where cash is not conducive to being parted with, 60-90-120 days is spelling disaster. Bankruptcies often happen without advance warning leaving creditors empty-handed, and quite often facing bankruptcy themselves. Be alert for warning symptoms. Offer discount incentives to promote quicker remittances. And do not be afraid to make a call or send a reminder notice when a receivable exceeds your credit terms.

5. LEASE OR RENT EXTRA OR UNOCCUPIED SPACE/INVESTMENT ACUMEN

Fixed costs are a glaring reminder of pre-committed expenses. Once alternatives like reducing superfluous expenses, freezing wages and finding new sources of revenue are done with take a look at your one big asset in your financial statement being mainly real estate/property. Turn a fixed expense into revenue generating vehicles. Every scrap of extra cash should be maximized. Set up short-term interest-bearing investments with cash surplus.

6. MAXIMIZE ON YOUR STRENGTHS

Concentrate your efforts on the heart of your business. Reduce and/or remove expensive revenue generating projects. Keep a watch on those aspects of your business that are in decline and evaluate its necessity.

7. HAVE A BACK UP SAFETY NET

With bankers or backers getting more nervous by the day and your confidence is disturbed by their predatorily overtones, perhaps it would ease your peace of mind by seeking non-institutional funding through venture capital or investment syndicates as an emergency fallback in case your bank were to call you loan. Short-term finances can be provided at a premium however so investigate your options before you take the plunge.

8. EMPLOYEE INCENTIVE PROGRAMS

Working through a slow down can become a dry and perilous journey with wage restraints in place, waived or reduced bonuses and ever increasing inflation. Promote employee loyalty by instituting incentives and rewarding those who come up with creative and practical ideas to save your company money.

These are just a sample of survival strategies that will keep your company humming to the tune of a better drummer. And most of all consider this as a time of opportunity and win when others are sleeping in their negativeness.

www.couzelis.com

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