Flashback to Summer 2008!

Last year this time Jay Goltz, columnist for Fortune Small Business, “thought maybe I was dodging a bullet.” I’m not sure what he’s thinking now but I’m sure he hasn’t dodged that bullet, at least not according to his monthly columns.

How about you?  Did you think last year you were dodging a bullet, that the downturn might be less dramatic and that standard responses to the downturn could pull you through?

How about now?  Do you expect that this summer building season will protect you through the expected downturn late in the year?  Many people have work for this summer but late fall and winter looks bleak.  Now’s the time to put into place significant changes to the business model.

Goltz says:  “if your revenue is off about 10%, that might not sound so bad.  But because of fixed costs such as rent, that 10% decline can easily wip out 100% of your profit.”

Here are some of his suggestions and observations from that article:

“I recently asked one vendor for a discount if I paid on delivery instead of the standard 30 days later.  The salesperson was skeptical but called back after five minutes offering 10%.

“I’ve saved by cutting back on yellow pages advertising … I think new media offers a better return.  But don’t be tempted to gut your advertising.  Companies that continue to advertise come out ahead after a recession.

“That’s another lesson I’ve learned the hard way:  you can survive decreased profits if you have cash flow, but the converse is not true – if cash flow takes a dive, you’re in trouble.  This will happen if you let your receivables … get our of control, which is surprisingly easy.

“Consider laying off someone instead [of cutting hours].  Cutting everyone’s hours might sound fair and reasonable, but it can do more harm than good.  What happens is that everybody suffers and eventually somebody quits.  Too often it’s the best person in the department who walks.”

Now, you, what’s your company’s biggest issue right now?  Cash flow is huge all around the country, track and manage your receivables vs. payables better to control cash better; have you cut hours across the board rather than biting the bullet and letting go the employees who aren’t truly A caliber; are you marketing better or just more?  And just as important – what are your numbers telling you?

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