A Recovery - Statistics Aren't Everything

The government is releasing statistics and starting to talk of the recession ending. It won’t be feeling like a recovery for many people. These sentiments were echoed in an editorial in the Washington Post. 2010 will still be difficult but there are opportunities too!

As business leaders this is a critical time for you. Regardless of whether you are making a profit now or if you are bleeding red ink you need to do some planning. This is the time to put plans in place for operating your business in an “unstable” environment.

Sit down and put together scenarios that show what happens if your revenues drop significantly. Look at revenue decreases that range from 35%-75%. Based on these scenarios you can then put plans/options in place to help you and your team manage through these uncertain times. You need cash to operate your business. Know how much you need. Getting any kind of financing now is extraordinarily difficult. Money just isn’t flowing from banks, etc. You have to find private funding but that comes with its own set of pitfalls. So do what you can with what you have. Look where else you can cut – people, products, benefits, etc. What else can you do to bring in additional revenues? Ask yourself all of the hard questions!

If you aren’t in the black now, do everything you possibly can to get back to positive. It’s ironic; companies that have seen decreases in revenues are now operating where they were a few years back. One clients business has dropped from over $4M to $2M. Of course, when they were at $2M they were thrilled. Now they have to go back to being able to operate successfully back at the $2M level.

I had one of my clients go through the process of identifying the various options available to them should sales drop significantly. They put “triggers” in place that set in motion certain activities should sales drop below pre-defined levels. The questions you have to answer include - what does it take to run your business, how much do you have to make in order to operate your business, and at what point do you shut the doors?

The environment will remain challenging for some time. Figure out what you need to do to operate successfully in unstable conditions.