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Is Your Business Surviving, Sustaining or Thriving?

The recent 2009 Kellogg Alumni Entrepreneur Annual Conference focused on positioning businesses in today’s market environment. The panels on “managing and improving your business in the downturn” and “recession-proof business models” provided interesting insights on cash flow analysis and investing during the upturn, as well as delivering bad news to suppliers, stakeholders and banks.

One of the livelier discussions centered around cash flow including questions such as:

• While “cash is ki ng,” do we spend the time necessary to understand what is coming in and going out on a weekly, if not daily, basis?
• Do we have the discipline to develop and keep current a rolling 13-week cash flow forecast?
• This led to panelists advising attendees on what to do when their cash flow analysis shows sub-optimal news. Ideas included:
• Talk to your key suppliers about how you are paid by your customers. You might find that you could benefit from modifying your payment terms.
• If your team understands that revenues are flat or down, explaining the need to forego raises for the year, or even take some sort of a pay cut, might be an easier discussion.
• One of the speakers noted that she was c urrently looking at how to speed up the order to cash cycle while at the same time improving customer service.

And then came the inevitable conversation about breaking bad news to your bank. The net advice here was straight-forward: While communicating bad news to the institution that holds your line of credit is never easy, it is nearly always better than surprising them with the news. Even worse would be having them bring the bad news to you. In other words, be proactive and prepared.

The speakers also focused on planning for an upswing in the economy. Insights included:

• Take the time now to prioritize which investment areas you will focus on when cash is available.
• While cash might be tight, missing cycles of investment will put your company further behind when the market turns.
• As you build investment plans, look for ways to get more out of the money you invest.

Despite the fact that times remain tough for most industries, there was a lot of conversation about available opportunities. The prevailing wisdom was that prices, whether for people, property, product lines or capital goods, are probably not going to be this low for long. If you can afford to invest, now is the time. If you don’t think you can, perhaps it’s time to rethink how you can.

We have boiled the conference’s main themes down to three questions—questions that are well worth asking yourself and your management teams now and frequently going forward:

• Do we understand our cash flow?
• Have we communicated with all of our constituencies regarding what is going on in our business and that we want to work with them both in the current downturn and when the market turns?
• Do we have an actionable plan ready to take advantage of opportunities when they present themselves?

Working through the answers to these questions will help you better understand where you are today in terms of cash, lineup of your greater business network (i.e., determine which suppliers and business partners are fully behind you) and, most importantly, uncover and seize today’s business opportunities.

It’s all about surviving and thriving in the current market environment.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.