Preparing for a Slowdown
Is Your Business Prepared for a Slowdown?
The COVID-19 virus is having a dramatic impact on business owners as they work to ensure the health and safety of client and staff and adapt their business operations. The impact of the virus will be felt for many months and will have a significant impact on financial performance. The need to monitor cash flow will be critical.
Cash is King
During any economic slowdown the need to preserve cash is paramount. Will you have enough cash to keep afloat if:
- The time it takes to collect accounts receivables doubles, or triples?
- Your net sales drop by 5%? What about 10%?
- Your profit margins drop 15% when you reduce the price of goods or services in order to compete?
- Your available credit is reduced by 50%?
During this one hour presentation, Chad and Anne run a financial stress test simulation to demonstrate how changes in different financial measures can impact your cash flow. The stress test simulation is followed by a discussion on strategies you can pursue to help minimize the impact of these changes.
Strategies to Offset the Impact of a Slowdown
When finances start to become stretched there are numerous steps you can take to improve your position. We’ll cover:
- Approaches for improving your accounts receivables
- Working with clients and suppliers to improve cash flow
- Reviewing fixed costs and assessing where to make cuts
- Examining the cost of goods sold to identify potential areas to save
- Reviewing your key financial ratios and maintaining productive relationships with your lenders
- Seeking out alternative sources of financing
Even if economic conditions remain robust, many businesses can experience their own slow down, and thriving businesses can benefit from improved financial performance after conducting a stress test.