Hi Marcel
Here's the last issue for this year!
The column is below, and there's a couple of images that jump to mind
1 - A factory in a vise, being squeezed - perhaps squeezing out a dollar sign
2 - piggy banks (or some other image to represent money or credit) moving along a conveyor belt and having to pass through a very narrow portion - causing it to get squeezed
3 - a roller coaster image (as mentioned in the second paragraph)
I'll leave it with you as to what one you think would be best to illustrate without getting too complicated
If possible, could I get a rough before the end of the week? and then the final Monday or Tuesday of next week?
THanks
Nicole
MANUFACTURING MATTERS
Surviving the credit crunch is about
instilling discipline throughout your business
The credit crunch is rapidly making its way from Wall Street and Bay Street to Main Street, Canada and is squeezing privately held businesses across a wide swath of industries. Slowing growth, weakening demand and reduced lending by banks compound an already difficult environment. While some regions of the country and certain industries are proving more resilient than others, our general advice to owners of privately held businesses is to take proactive steps to prepare for challenging days ahead, particularly with respect to businesses that rely on the US market or are exposed to highly volatile commodities.
The current upheaval in the credit markets is analogous to riding a rollercoaster on its way down a steep hill for the first time. It has everyone holding on tight, hunkering down, with a sick feeling in their stomach and wondering when the worst will be behind them. Keeping track of all the events and understanding the impact is a daunting task. The following is a 10-point checklist of things to consider as you manage through this difficult time. With careful planning and foresight, you might even be able to turn conditions to your advantage. Businesses that are well capitalized, well positioned and well managed should see opportunities.
Most of the suggestions are about good business practices. Business owners and their management teams often ignore the fundamentals when the focus is on revenue growth, as it has been for several years now. That growth was fuelled by easy credit, sharply increasing leverage and rapidly expanding global demand, but that emphasis will need to change for now. The coming months should be about instilling rigour and discipline throughout your business.
1. Cash is king In a slowing economy understanding and managing cash flow is of paramount importance. Liquidity can become constrained very rapidly. Advance rates on inventory tend to be low, so focus on selling inventory to generate cash.
2. Get closer to your bank Treat your bank as a partner in the business. Keep them informed and help them understand your business, your industry, and competitive dynamics. Don’t fall into the trap of thinking that it’s up to the bank to guide you through any issues or problems.
3. Be relentless on cost control Employ zero-based budgeting to review all costs very carefully in terms of their value to the business. Don’t automatically cut marketing expenses. While this is traditionally seen as an easy target, doing so can have a significant impact on your competitive position, particularly when market conditions pick up.
4. Evaluate customers and suppliers Ask yourself a simple question: If your customer were to file for bankruptcy tomorrow, what would happen to your business? Don’t assume your customers or suppliers are financially healthy. Failing to promptly collect receivables may result in a cash flow shortfall that could affect all areas of your business.
5. Get smarter on tax As a general rule, don’t make tax payments any earlier than you need to. Start by determining if you qualify for quarterly as opposed to monthly installments. The ability to make installments quarterly rather than monthly can be an important cash flow saving.
6. Reconsider capital investment plans The easiest thing to do is to just stop investing in capital during difficult times. Don’t default to this position automatically. Failure to make necessary investments or maintenance capital expenditures can put you on a slippery slope.
7. Consider your financing options Do not automatically assume that your current lending relationships are going to stay in place. Avoid being in the position of not understanding your alternatives if you are forced to end your relationship with your bank, lender or other investors. Court other sources of capital, just in case. Don’t be left without a contingency plan.
8. Keep an eye out for bargains Do not make an acquisition just because you can. Good acquisitions are part of a well-thought-out growth strategy. Remain absolutely focused on the day-to-day running of the business. Be mindful of debt capacity and don’t over-leverage the business.
9. Protect your personal wealth When business conditions get tight, it’s important for owners to avoid being too reliant on the business. You need to have a clear view of how you separate your personal wealth from the finances of your business.
10. Worst-case scenario Do not, under any circumstance, wait until you’re almost out of cash. Build cash reserves and hire professionals who can help you assess your options. Don’t assume the problem will go away over time. In most cases, doing nothing will cause value to erode rapidly.
