Did you see the current economic storm coming? Were you listening to what the reputable commentators were saying and reviewing the likely impact on your business?
If not, its time to raise your eyes from working in your business and look at what is happening around you.
Upheavals in world financial markets caused by the US sub-prime mortgage problems has made many business owners very nervous. Every day the news seems more gloomy as world stock markets tumble and yet another banking icon declares losses that are incomprehensible to mere mortals who occupy the small business world.
When economic sentiment turns from optimism to caution cutomers tend to close their wallets and wait for the air to clear. As a result, business owners are forced to review sales forecasts, marketing strategies, production plans and cash flow projections to ascertain the best course to survive the storm and identify new opportunities.
What should you do when the world seems to be closing down?
- Review your customer and product profiles - Is you business concentrated on a range of customers who are able to survive economic storms and do you provide the products and services to help them survive?
- Review your marketing strategies - Do your customers, and others like them understand understand the total solutions your business provides? How are you making this information available to them and what mesages are you delivering? Are your current marketing strategies still appropriate? What new opprtunities present themselves in difficult times?
- Review your production plans and processes - What is the balance between production and inventories? How does production align with current market conditions? Are your production processes producing the best output for the least appropriate cost and minimum waste? Are you producing what your customers actually want and at a price they are willing to pay?
- Review your cash flow projections - When times are tough, cash is king. Are your credit and cash collection policies current, appropriate and complied with? Are your inventory holdings in line with current customer requirements (inventories can be one of the hidden stores of cash in your business)? Do you have other assets which are surplus to requirements and could be sold for cash? Will projected cash flows allow you to ride out the storm?
Any good sea captain uses all the resources available to him when storms arrive. He not only relies on his own knowledge and information provided by his instruments, but also on his navigator, engineer, and the rest of the crew , as well as advice from outside his vessel to help steer a safe passage through the storm.
By all means use the institutional knowledge within your business to plan your way through the current economic turmoil. Remember though, there is advice available from outside of your business also, and often the perspective from outside is clearer than from within. Your banker, lawyer, accountant, trade association and business coach can help you steer a course to new opprtunities and/or safe havens.
