THE SHOP

November '19

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12 THE SHOP NOVEMBER 2019 enues if operations shrink. You can always accelerate payments down the road, but you cannot decelerate them." You might be able to take other steps to clean your balance sheet. Examples: Can a significant portion of short-term debt be restructured through a 10-year Small Business Administration-backed loan, resulting in smaller monthly payments? Or, can your straight line of credit be made less expensive by turning it into one secured by accounts receivable? Bonus tip: Postpone major initiatives unless they promise to generate timely significant revenue. DIVERSIFY FUNDING SOURCES Time is also of the essence when it comes to long-term debt. Banks hold their cash tighter when recessions begin. "It is easier to borrow now, when banks can see you have healthy cash flows," says McQuaig. "The situation is far different when your income starts to drop. Waiting too long to apply for loans gets a lot of businesses in trouble." Make sure you are on solid ground with your primary funding source. "Now is a good time to have a conversa- tion with your banker," says Feiman. "Ask questions such as, 'What if a recession hits? What if I need a little more working cap- ital? What do you need from me today to pre-approve that?' If you give your banker enough time, just about anything can be worked out. But, if you run into the bank at the last minute for financing, the story is far different." Also, no matter how secure you are with your main bank, have Plan B ready to go. "You want to cultivate a secondary financing relationship," says Feiman. "Tell the institution you will not be making them your primary source today, but you want to start a relationship that leads to their stepping up to the plate if and when they are needed. Consider starting a small account to encourage their commitment." Trimming unproductive fixed costs and wasteful expenses are both great ideas. But avoid the common temptation to short- change marketing. "While you need to be careful and strategic in what you spend, promotion, advertising and growth-related initiatives are mandatory, even before and during a recession," says Joel G. Block, presi- dent of Bullseye Capital, a management consultancy in Agoura Hills, California (bullseyecap.com). "If you neglect them, your business will not continue to grow. You will potentially shrink into oblivion." Bonus tip: Sell unneeded assets now, using the cash to pay down debt and reduce leverage. RETOOL & RECHARGE While no one is happy when the economy softens, a downturn can serve to reveal opportunities for making your business stronger and more profitable. Turn hard times into an advantage. "View the recession as an opportunity, not a threat," says Ennico. "Take the time now to ask how you can expand your business when the downturn arrives, even How to Recession-Proof Your Business Enlist Your Employees Make recession-busting a team effort. Push your business into high gear by enlisting the energies and ideas of your employees. "When it comes to personnel, the biggest downside is a lack of communi- cation," says Lisa Anderson, president of LMA Consulting Group, Claremont, California. "Keep your employees in the loop by letting them know that econo- mists are predicting a recession. But rather than causing panic by casting the economic downturn as a bad thing, present is as an opportunity to gain market share by spending more time with shoppers, solving their problems and convincing them your store will be around while competing suppliers fall by the wayside." Brainstorming with your staff can uncover hidden treasures. "Employees have a vital perspective on the market, because they are so close to customers," says Daniel Feiman, managing director of Build it Backwards, a consulting firm in Redondo Beach, California. "Encourage them to speak up with their ideas." This is also a good time to build flexibility and agility into your workforce. "Crosstrain skills so you can move people around in response to unantici- pated shifts in the workload when the recession arrives," says Anderson. "And also consider utilizing temporary labor to fill in the gaps, performing any work duties you are not sure will carry into the future." Resist the temptation to trim the workforce too deeply when hard times arrive, however. "While cost-cutting can be important when preparing for a recession, try to keep your trained workforce in place," says John McQuaig, managing partner of McQuaig & Welk, the Wenatchee, Washington-based management consulting firm. "Many times, companies cut their staffs too deeply, then cannot recover after a recession because skilled workers are not in place to regenerate revenue." Bonus tip: When a recession hits, eschew morale-busting layoffs in favor of more productive labor-saving adjustments such as hour reductions, furloughs, part time positions and performance pay. —Phillip M. Perry though you will not be making as fat a margin. What are the services and busi- nesses you can get into without too much change? How can you show current and new customers you are willing to better meet their needs?" Above all, be flexible. "Good businesses make money in good times and bad," says Ennico. "While there is no recession-proof business, the winners are those that adapt best to challenging conditions." New York City-based journalist PHILLIP M. PERRY publishes widely in the fields of business management and law.

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