Iber Plaza

An economic downturn in the business cycle is the stage where the overall economic decline.This phase basically marks the end of the growth in the business cycle. economic downturns characterized by decreased levels of consumer purchases (especially of durable goods) and, later, the rate of decline of production by businesses.

While admittedly difficult economic decline and severe obstacles for small businesses trying to survive and thrive, economic conditions can open opportunities. A well-managed company can realize the opportunity to gain market share by taking customers from their competitors. reasonable entrepreneurs seize opportunities that are available, from the economic downturn, by developing alternative methods of doing business that was never performed during the previous growth period.

The challenges successfully navigate your business through an economic downturn lies in the realignment of your business with current economic realities. Specifically, you, as a business owner, need to renew focus on your core clients/customers, reduce your operating costs, save money, and manages more proactive, not reactive, it is very important.

Here are best practices that will help you to successfully navigate your business through an economic downturn:

Goals:

The main goal of every business owner is to survive the current economic crisis and to develop a more streamlined, more cost-effective and more efficient operation. Secondary objective is to develop the business even during the current economic crisis.

Objectives:

Conserv •e cash.

• Protect assets.

• Reduce costs.

• Improve efficiency.

• Grow customer base.

Required Action:

• Do not panic … History shows that economic downturns do not last forever. Stay calm and act rationally because you focus on the size of your company with current economic conditions.

• Focus on what YOU can control … Do not let the media rhetoric concerning recessions and economic slowdown is preventing you from achieving business success. It’s a trap! Why? Because of economic conditions beyond your control. Surviving economic downturns requires a focus on what you can control, namelyYour relevant business activities.

• Communicate, communicate, and communicate! Beware of the traps trying to do too much on your own. This is a difficult task indeed to survive and to grow your business solely with your own efforts. Ask for their ideas and seek help from other people (employees, suppliers, creditors, customers, and advisors). Communicate honestly and consistently. effective two-way communication is the key.

• Negotiate, negotiate, and negotiate! The value of a strong negotiation skill set can not be overstated. Negotiations and contracts is an absolute must to adjust and change the size of your company with current economic conditions. The key to success is to not only know how to develop a win-win approach in negotiations with all parties, but also consider the fact that you want a favorable outcome for yourself too.
Best Practices
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1. Diligently monitor your cash flow: Forecast monthly cash flow to ensure that the costs and planned expenditure in line with the receivable. Include a statement of cash flows into your monthly financial statements. Project cash requirements three to six months in advance. The key is to know how to monitor, protect, control, and put cash to work.

2. Carefully convert your inventories: Convert excess, obsolete, and slow-moving inventory items into cash. Consider returning excess and slow-item moved back to the supplier. Close-out or inventory reduction sales work well to resize your inventory. Also, consider narrowing your product offerings. Well-time for placement to help reduce excess inventory levels and occasional material shortages. The key is to reduce the amount of your inventory without losing sales.

3. Your timely billing accounts receivable: This asset should be converted into cash as quickly as possible. Offers fast payment discounts to encourage timely payments. Making changes to the terms of sale for slow paying customers (ie changing net 30 day terms to COD). Invoicing is an important part of cash flow management. The first rule of invoicing is to do it as soon as possible after the product shipped after and/or services rendered. Place emphasis on reducing billing errors. Most custoMers late payments because an invoice had errors, and therefore, will not pay until they receive a copy be corrected. Email or fax your invoices to save time delivery. Post your payment has been received and make deposits more frequently. The key is to develop an efficient collection system that produces timely payments and one of the problems that give early warning.

4. Re-focus your attention on clients/customers there: Make customer satisfaction your priority. Regularly review your purchase history and frequency of customer purchases can reveal some interesting facts about the buying habits of your customers. Consider signing long-term contracts with your core clients/customers which will add to your security. Offer a discount for upfront cash payments. The key is to do what is necessary to maintain your current loyal customers.

5. Re-negotiation with your suppliersers, lenders and owners:

i) Suppliers: Always keep your negotiations on the level of need, saying that your company has reviewed its cost structure and has determined that it needs to lower supplier costs. . Tell the supplier that you value your relationship has developed, but you should receive a cost reduction immediately. Ask your suppliers with lower prices, longer payment cycles, and the abolition of the financial burden. Also, see if you can buy material from them on a consignment basis. In return for their price concessions, be willing to approve a long-term contracts. Explore the idea of bartering as a form of payment.

ii) Lenders: Everything in business finance is negotiable and your relationship with the bank is no exception. The first step to successful renegotiations is to convince lenders that you can finally pay off loans renegotiated. You must demonstrate to your lender why their best interests to approve the new arrangement. Showing them your business plan and your action plan that includes your cost-savings initiatives, along with “how” and “when” execution of your plan is the best way to achieve this goal. Explain to them that you will need their cooperation to ensure that you can survive, as well as, grow your business during economic downturns. Negotiated items include: interest rate, the security required to cover the loan, and start dates for payment. Start date for payment can be done directly, in a few months or years. The key is to realize that your lender will work with you, but communication is often and constantly with them is very important.

iii) Landlord: Meet with the homeowner. Explain your need to have them extend the term of your lease with reduced costs. Make sure you have a Claudialease agreement, which entitles you to have the right to lease or rental space.

6. Re-evaluate your staffing requirements: This is a very critical area. Salaries/wages is a major expense in running a business. Therefore, any reduction of hours worked through work schedule changes, short-term layoffs or permanent layoffs have a direct cost saving benefits. Most companies ramped up hiring new employees in good time, only to discover that they are currently overstaffed due to slow sales during economic downturns. In the case of down-sizing your staff, be careful not to reduce your staff to a level that forces you to skimp on customer service and quality. Consider using part-timers or the current trend of outsourcing certain functions to independent contractors.

7. Shop for better insurance rates: Get quotations from other insurance agents forr comparable coverage to determine whether or not your insurance carrier more competitive. Also, consider revising your coverage to reduce premium costs. The key is having the right balance-to be adequately insured, but not under or over insured.

8. Re-evaluate your advertising: Contrary to other cost-cutting initiatives, evaluate the possibility of increasing your advertising expenditures. This tactic realizes the benefits of noise “reduce” and congestion (fewer advertisers) in the market. Period of decline a great opportunity to increase brand awareness and create additional demand for your product/service victims.

9. Seeking help from outside advisors: The use of an advisory board comprised of your CPA, attorney and business consultant offers objectivity and provide professional advice and guidance. Their collective experience in the jobing with similar situations in past economic downturns is invaluable.

10. Check for other expenses: Target-based-initiatives to cut costs 10-15% council. Attempt to eliminate unnecessary costs. Tighten your belt to reduce the weather makes practical, financial sense.

Proactively manage your business through the economic downturn is a big challenge and very important for your survival. However, through the planned initiatives, an economic downturn can create tremendous opportunity for your company to gain greater market share. In order to take advantage of growth opportunities, you must act quickly to implement the above best business practices to continue to adjust and change the size of your company with current economic conditions.

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