10 Critical Points That Companies Must Take Now

With all anxiety in the market and talk of a possible recession, a good decision as a business owner is to prepare just in case. As you look to operate more efficiently and generate new streams of revenue it is good to get back to the basics.

1. Watch the cash flows
Cash flows are the life blood of your business. Before your industry takes a hit, its more important than ever to keep the books up to date and monitor cash flows closely and revise those projections. If you wait too long, it could be too late.

2. Manage the key influencers to your cash flow
Keep a careful eye on the areas that impact cash flow, especially accounts receivable and inventory. Make sure that you are not trending in the wrong direction and look to the RMA benchmarks to evaluate how you are doing against your peers.

3. Insist on good financial data
Accurate, timely financial statements are critical in tight economic times. Don’t accept excuses. If you don’t have a good bookkeeper or CPA get one now, the investment could mean whether your business is still standing after a downturn.

4. Stay close to your clients
This will make sure you keep your good clients, find new opportunities and find out if any clients are having troubles before you are stuck with the bill.

5. Review your long-term financing
Are you financing long-term assets (equipment) with short-term loans or short-term assets (inventory or working capital) with long-term loans? If so look to refinancing to a loan that is more appropriate to the assets life expectance if you can lower overhead costs.

6. Get financing in place
The worst time to get financing is when you are bleeding cash. Arrange for anticipated loans and lines of credit before you need it. Looking at cash flow projections will help decide on how much you might need.

7. Have good advisors and use them
Make sure you have a solid team of outside advisors and meet regularly and listen to what they have to say. If you don’t have a group to turn to, make this year’s resolution to get one.

8. Monitor Accounts Receivables closely
When problems arise in an industry, people and companies will take longer to pay, if at all. Be sure your company is at the top of processing invoices and immediately calling if they go beyond the average days outstanding.

9. Don't turn financial decisions over to others
There's no need to turn yourself into an accountant, but you must be able to read financial statements and what the numbers mean in relation to the health of your business. At the end of the day you are responsible and must know this information.

10. Fire the bad clients
We all have them, but maybe now is a good time to get rid of the time intensive and low profit margin clients and streamline your own operations.

The Business Plan Factory has helped entrepreneurs since 1999 with the development and review of business plans, creation of financial projections and business coaching.