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Breaking Through the Toughest of Business Situations

In my years navigating business finance, I’ve seen companies of all sizes face challenges and celebrate successes. It’s a universal truth: business is as much about peaks as it is valleys. However, with the right insights and a proactive mindset, even the toughest challenges can be tackled. This isn’t just about the numbers; it’s about the drive and determination behind them. Let’s dive into strategies that can help businesses find their footing during uncertain times, armed with practical knowledge and forward-focused thinking.

 

Always be prepared for the unthinkable.  We’ve had a tenuous twelve months and the next twelve unclear.  Crisis can happen.  Here are a few of our top suggestions to incorporate into your planning:

 

  1. Reserves
    1. Minimum cash reserves should be equal to three times your monthly spend. Ideally six months is preferable during times of uncertainty.
    2. Establish a working line of credit with a reputable lender if you do not currently have one in place.
    3. Inject personal funds or assets as a temporary relief measure.
    4. Ask for help from friends and family. They may be willing to lend money or invest in the long-term success of the business.
  2. Existing Debt
    1. If you have a large amount of existing debt, negotiate with your lenders for debt restructuring, deferred payments, or conversion to a debt equity instrument.
  3. Operational Review
    1. As long as there are not any continued challenges with your supply chain, adopt a strategy of just-in-time inventory management. Don’t suspend cash in non-moving or obsolete inventory.  Liquidate inventory that is non-moving or obsolete.
    2. Be honest with Customers and Suppliers about the current state of your business. It will not be a shock to them, and they will be very supportive if your relationship has been strong.
  4. Staffing
    1. Be honest with your employees and prepare them for possible outcomes. This can be a strong strategy to gain acceptance and creativity if handled with trust and respect. 
    2. Be cognizant of your current staffing levels. Use this time to evaluate those who are underperforming and base your future staffing levels on either training them up or managing them out through a layoff if one is needed.
    3. I have had multiple opportunities to be creative with professional staff cost cuts. You can keep your staff but temporarily restructure their duties, where they are working, and hours per week to temporarily reduce overall payroll burden.
  5. Review your Core Business Strategy
    1. Conduct a thorough margin review and determine where there are opportunities for improvement by cutting non-profitable sectors and/or products. Work smarter not harder….
    2. Focus your time and energy on your core competencies. Outsource non-core functions.
  6. Exit Strategies
    1. Does this downturn provide an opportunity to exit the business? Is there still value that another company may be interested in? 
    2. If not now, review your exit plan strategy for the future and update for current changes in the business environment. You may have to recast and re-think your final strategy.

Experience has shown me in navigating the complexities of business finance that challenges and successes are integral to the journey. The obstacles are real, however, with strategic planning, understanding, and determination, we’ve always been able to chart a path forward. Resilience is more than just pushing through; it’s about growing, adapting, and learning from each experience. As we continue to move forward, let’s draw from our shared knowledge and remain anchored in our mission. Here’s to the progress we’ve made and the continued growth ahead.

To hear more about my experience and to contact us to find out how we can help you, email me at aroman@cefoadvisors.com.  You can also check us out on the web at www.cefoadvisors.com or call us directly at 518.693.7446.

 

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