Shift Past Recovery’s Neutral Into Drive

John Edson, CPA/ABV, CFF, CMA

Shareholder

BPK&Z

jedson@bpkz.com

www.bpkz.com

Topic: Accounting

Watching and waiting at the intersection of your business and the economy seems to be coming to an end. More company leaders are driving ahead with supplier consolidation, research on merger options, and investment in the elements of their businesses that promise continued growth.

Companies are making a fresh start with realistic expectations and a confidence gained from surviving tough times. Every decision, communication and action is strategic because no one can afford to take a risk beyond his or her means. The safety nets have disappeared. The business climate moving forward should have less speculation and more fit and financially sound companies. To follow that positive trend, here are few things you can do in your business to build strength and drive ahead.

Stay Flexible. Don’t commit to fixed expenses that sacrifice cash flow and flexibility. If your office lease is coming up for renewal, take advantage of today’s low rates. Agreeing to a long-term lease, however, may not be the best choice. If you have considered buying a building, do it only if you can maintain a financial cushion in the long run. 

Court Competitors. Every industry has been tested for survival of the fittest. Those who remain could gain a competitive edge by looking at synergies among their competition for possible merger or acquisition. The advantages include a more robust customer list, economies of scale in personnel and overhead, and additional product line and service offerings. Of course, this move requires due diligence and sound professional advice to ensure the right fit, assess the value each party brings, and assess the risks.

Focus on the Core. Companies are building upon the best revenue generators in both products and services. They are avoiding or eliminating higher risk offerings or anything with sluggish sales. Marketing dollars and efforts should be narrowly focused on areas that will bring the most gain rather than diluted campaigns.

Stay Lean. Companies have already scaled down significantly reducing the number of vendors and personnel and focusing on key clients. They’ve assessed and eliminated inefficiencies in their processes and project timelines. They’re more diligent with qualifying customers for credit. When the market improves, you should maintain efficiencies; don’t become over-confident. There is still economic turmoil. Every process, client, vendor and employee must align with the strategic direction of your firm. 

There are no immediate indications that we will see a sudden market surge, a return of previous employment levels or a loosened financing climate. With this in mind, your company can still move forward. Drive your business with the knowledge you’ve gained in crisis, and communicate and focus on what you do best. 

2010-08-24 23:00:00 -0600