A Seattle bank invited me to speak to their clients, and afterward the bank did something different: they presented a panel of their clients to talk about how the downturn was affecting them. The best part was the tips presented by these business leaders. They covered almost everything I wrote about business strategy in a recession in Businomics. Here are the key points:
- Watch your inventory level closely; don't let it get out of hand
- Watch trade credit. Be cautious extending trade credit, and collect aggressively
- Watch staffing levels. If you are going to have to cut, better to do it early.
- If you have some employees who are critical, and you want to keep them even if they are underutilized now, ask them to step up their training and education so that they'll have stronger skills when the economy recovers.
- Do more marketing now. Not only will you occasionally turn up new opportunities, but calling on prospective clients helps you keep your ear to the ground. You'll learn earlier about problems your competitors may be having.
- Take care of your good customers. They may be having difficulty. Even though the panelists said to watch trade credit, this may be the time you have to stretch to help a few key, loyal customers.
- Look at acquisition opportunities; you may be able to pick up a competitor fairly cheaply.
The one point they didn't make that I would add: talk to your banker. Specifically,
- Report any bad news early. Your loan officer has an easier time going to bat for you if there have been no surprises along the way.
- Ask your banker about your credit quality. Did he have to stretch to get your line approved, or do you lie right in the bank's sweet spot? That's vital information to have.