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           “Every business suffers from costly               GET AHEAD OF THE RECESSION
         fat that tends to grow over the years, es-  What are some signs that a reces-  “Every business should have con-
         pecially during long periods of growth,”   sion is about to hit? While no one can   tingency plans for many things,
         says McQuaig. “Now is the time to iden-  read the  tea leaves with  any accu-  but especially for a recession,” says
         tify where your people are wasting their   racy, you might want to keep an eye   Cliff Ennico, an attorney and busi-
         efforts and how your operations can be   out for some clues from the biggest   ness consultant in Fairfield, CT
         made  more  efficient.  Is  an  entrenched   market players.          (cliffennico.com). “We have to keep
         bureaucracy, for example, slowing your   “A number of large layoffs by the   asking, if the bottom were to fall
         customer response time?”             biggest employers can be early warn-  out of the market tomorrow and
           Rationalizing your  operations can   ing  signs  of  a  recession,”  says  Mi-  customers  start  canceling  orders,
         unleash hitherto unrealized potential.   chael  Asbury,  founder  of  Elevate   what would be the action plan –
         “Most businesses  have a lot more ca-  Coaching and Consulting, Trinity,   what would I do one month and six
         pacity than they realize,” says Asbury.   NC (elevate-outcomes.com). “I would   months from now?”
         Unlocking efficiencies will help shorten   also  be concerned if  large  corpora-  Whatever your game plan, focus
         your backlog and allow you to process   tions start lowering their forecasts.   on retaining the customer for the
         orders more quickly.  At the same time,   That will often be reflected in their   long term. “Recessions eventually
         he says, you can become a more reli-  stock prices.”                  come to an end,” says Ennico. “When
         able supplier: “A shorter lead time can   When the recession does arrive,   they  do,  whom  will  customers  stay
         land more initial orders. Then, your on-  tips  in  the  adjoining  article  will   with? The companies who were loyal
         time delivery and quality can cultivate   help you navigate the rough wa-  to them and helped them out in the
         loyal repeat customers.”             ters. But make your own steps part   tough times. So start now to build
           Here’s another way to increase ca-  of a larger master plan.        your relationships.”
         pacity: Leverage the digital revolution.
         A recent  Harvard Business  Review   er is experiencing a temporary problem,   flow straight to the bottom line.”
         study found that successful companies   your loyalty to them can pay off down   Even if certain fixed costs can’t be cut
         tend to use funds from reduced operat-  the line, he says. “If you help customers   overnight,  starting  the  thinking  pro-
         ing budgets to invest in productivity-  now, they will stick with you forever.”   cess  early  can  pay off  down  the  road.
         boosting technology.                 Cash is a two-way street.  Monitor   “You might not be able to shrink your
           But wait: Isn’t a recession  on-ramp   how quickly the cash is flowing out as   physical space this month,” notes Mc-
         the wrong place to increase spending?   well as coming in. The goal is to stay   Quaig,  giving one  example. “But now
         Not  if  it  results  in  a  more  profitable   liquid. “If you have cash you have op-  might be a good time to plan a possible
         operation, says McQuaig.  “Doubling   tions,” says Feiman. “If you run out of   reduction two years down the road.”
         down may seem counterintuitive,  but   cash you are out of business.” Don’t just   Bonus tip: Cut variable costs by re-
         it can be the best way to prepare for a   relay on financial statements that look   tooling your procedures to more closely
         recession.”                        backward, says Feiman. “Design and   meet customer needs.
           Bonus tip: Remember the adage, “You   access cash budgets that look forward.”
         can’t cut your way out of a recession.”  Bonus tip: Remember Feiman’s basic   SECURE WORKING CAPITAL
                                            rule:  “Collect  an  old receivable  before   If cash is King, working capital is the
         CONTROL CASH FLOW                  making a new one.”                 heir apparent. You need enough reserve
           A  recession  can  send  a  company’s                               financial capability to tide you over dur-
         normal revenue rhythms into a tail-  TRIM FIXED COSTS                 ing a cash flow squeeze. One way to do
         spin. “My first concern for any business   While  you’re  monitoring  those  cash   that  is to  trim  your  outstanding debt.
         anticipating a downturn is the smart   currents,  consider  your  variable and   “The best thing you can do now is pay off
         management of cash flow,” says Daniel   fixed  costs.  The  former  tend  to  be  re-  your  credit  lines,”  says  Ennico.  “Have
         Feiman, Mg Dir of Built it Backwards,   lated directly to production and there   them ready as cash reserves in case you
         a consulting firm in Redondo Beach, CA   is often little fat to be trimmed. It’s the   need them down the road.”
         (builditbackwards.com). “Start to moni-  second that often holds the most prom-  Again, an early start pays rich divi-
         tor more closely what is coming in and   ise. Identify discretionary expenses   dends. Arrange for any additional cred-
         going out. Are turns slowing? Is your   that can be cut.              it  lines  while  the  economy  and  your
         cash being locked up for longer periods?”  “You really have to watch fixed costs   business are still in good shape. “The
           Make  accounts  receivable  top of   such as lease payments, depreciation   time to negotiate with  banks  is  when
         mind. “Use  your  aging reports proac-  and building related expenses,” says Mc- Looking for a product or service
                                                                               you don’t need them,” says Ennico.
         tively, not  reactively,” says  Feiman.   Quaig.  Many  companies  over  the  past   If having sufficient reserve capital is
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         “When  receivables start to become   decade have succumbed to the tempta- related to wire rope and slings?
         stale, communicate early with custom-  tion to increase fixed costs in anticipa-
         ers. If there’s an issue, resolve it.”   tion of higher revenues. “The problem
           When good customers start slowing   is that those costs will not change very
         their  payments,  you  want  to  respond   fast as your income starts to go down.”
         in  a  way  that  avoids  alienating  them.   In a declining market, fixed costs tend
         Keeping on top of the problem will re-  to eat into the bottom line.
         quire good communication skills. “Call   Cutting  fixed  costs  can  spark  dra-
         and ask the customer if there is any   matic increases in profit, says Asbury.
         problem,” suggests Ennico. “You might   “If you can  increase  your  sales  while
         say something like ‘I know times are   holding fixed expenses constant, a good
         tough. Are you hurting?’” If the custom-  portion of the increased revenues will

         28     Wire Rope News & Sling Technology   October 2019
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