How to come out on top in a sluggish economy

In case the sluggishness we are feeling in the economy continues beyond the election, this is a good time to revisit what to do. In periods like this, cash is king and you need to operate accordingly; you may not be able to cover up mistakes by growing revenue. Here are some additional thoughts:

  • React to current conditions, not conditions you wish existed.
  • Adhere to your credit policies. Don’t pick up your competitor’s credit problems.
  • Keep the calculation of your cash breakeven up to date and manage your business with that in mind.
  • Make use of an interactive financial model to test “what if” scenarios and drive staffing levels.
  • Knowing profitability by customer, product or segment allows you to focus on areas where you enjoy better margins.
  • Know your costs so that you can make strategic pricing decisions.
  • Make sure you stay close to your key accounts. Your competitors will be gunning for them.
  • Reposition your message to deal with current realities, i.e. promote your equipment rebuilding services, not just new equipment sales.
  • Be alert to the impact of decreasing order size on your fixed costs per order.
  • Keep up communications with your lender. Make sure you don’t give them any surprises.
  • Take steps to speed up your financial information. Use estimates if necessary to improve the timeliness of your numbers. Use this information to quickly respond to changing conditions.
  • If you get into a jam, honest communication is key. If you make promises, keep them!
  • To keep your good employee base intact, consider a reduced work week for everyone or rolling layoffs of one week off one week on.
  • Finally, stay positive. You can’t see where you are going if your head is down. People with negative attitudes tend to miss opportunities. The pendulum always swings back.

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