Recession-Proof (CONT’D FROM PAGE 20)
Quality & Consistency
sively in their efforts to chase demand,” said Basu. “But some of those workers have not been performing as well as one might have wanted. That's the kind of worker that probably could be let go to help raise cash flow today to preserve fiscal health tomorrow.” Consult Bankers Tough times require a fresh outreach to primary lend- ers. “Now would be a great time for any business using any type of financing, whether it's longer term debt or a line of credit, to reach out to their banker and have a con- versation about what can be done in the event of a down- turn,” said Brownell. Some questions to explore: Can interest rates be locked in? Can lines of credit be extended? Can monthly payments be reduced? “The whole idea is to ensure con- tinuing access to capital. You don’t want to be surprised by your bank reducing your line of credit because of changes in your P&L.” Take special care that your changing profit picture does not inadvertently violate the terms of any outstanding loan agreements. “Maintaining a dialog with existing lenders is critically important in a recession, because some loan doc- ument ratios may be affected,” said Palisin. “Bankers need to know where you stand financially and what’s going on with your company.” Prudent companies also create a Plan B for funding sources. “Having alternative sources of financing in place can be helpful to facilitate mergers,” said Palisin. “But com- panies need to do their homework. Some of the alterna- tive financing sources can be expensive, especially in a high interest rate environment.” Spot Opportunity Successful enterprises see economic downturns as op- portunities to solidify and increase their market presence. “Businesses need to focus not only on how to get through a recession, but also on how to be stronger coming out of it,” said Harms. A close look at the competition can uncov- er opportunities that will strengthen a company over the long term, he added. Is a market sector being abandoned by a competing enterprise? Finally, strong enterprises can take advantage of op- portunities to absorb weaker ones, said Palisin. “For com- panies with strong cash flows and healthy financial ratios, it can be financially feasible to look into potential mergers and acquisitions. "The key to success is to remain healthy during a recession so you can take advantage of the op- portunities that arise when the economy recovers, said Roberts. “The most successful companies in a downturn will be those that execute the best.” Phillip Perry is an award-winning freelance writer based in New York City and a regular contributor to Board Converting News. His byline has appeared over 3,000 times in the nation's business press. Reach him at https:// www.linkedin.com/in/phillipmperry/.
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