Thoughts on recession-proofing your business
Editor's Note: Part of the information in this article came from the EASA Operating Survey conducted by the Proft Planning Group in 2008.
In the current economic environment, firms are placing much more emphasis on financial integrity than ever before. However, the vast majority of potential actions are ones that should have been taken before a recession hits. It proves almost impossible to strengthen balance sheets, for example, when sales and profits are sliding. In addition, some of the actions taken to strengthen the firm are proving to be counter-productive. For example, enhancing the firm's cash position frequently comes at the expense of profitability. This report will examine the issue of financial integrity. That means the ability to survive an economic downturn with a minimum of pain. The report will also suggest that the lessons of this recession should not be forgotten amidst the euphoria of the eventual recovery.
The report is organized into two key sections:
- Things To Do in the Future - This section will provide a checklist of key ratios to monitor that will ensure the firm faces the most minimal financial turbulence possible under any economic conditions.
- Things Not To Do Now - This will provide a cautionary road map to actions that should be avoided at present.