By: Barry Worth, Partner

Back in the early 1990’s I wrote an article about the same topic. Of course, it was a different time with different issues; however, the solutions are still the same. Therefore, I thought it would be a good thing to recycle the topic.

At the time of the first article, I started it off by saying:

“As an integral part of a global economy, we are heading into some of the most uncertain times we have ever faced in our lifetimes.”

Well, in addition to the above, we also had no growth, stagnant economy, rising prices and facing a recession.

So, today I’m sure all would agree that we’ve made it through those issues well. However, now that there is such a push over the globe for more thinking of nationalism and not as much cooperation – it raises three questions:

  1. Where is this going to take our business community?
  2. What’s going to happen with our supply chains?
  3. How much disruption will there be in your business and what will it look like in five years down the road?

In dealing primarily with family and closely owned businesses my whole business career, I found that most do not think of these questions and don’t do the proper planning asking the correct questions to lead their companies down the correct path to success. As the old saying goes:

“If you don’t know where you’re going – any road will take you there”.

But, as the Old Boy Scout says:

“Be Prepared”

My main theme in this article is to help people be more proactive and think about “PLANNING” and managing their business.

Planning is defined as:

  • “the act or process of making a plan or plans”
  • “a scheme or method of acting, doing, proceeding, making, etc., developed in advanced”
  • “a design or scheme of arrangement”
  • “a specific project or definite purpose”
  • “to arrange a method or scheme beforehand for (any work, enterprise or proceeding)”

As you can see, planning is thinking about the future and being ready for what lies ahead. This is the biggest piece of managing. Leadership must have a VISION and what the business will look like and how to plan for potential future events.

What happens to your supply chain if you are no longer able to trade with certain countries and that is your main supplier?

Let me relate a short story that happened to me in the last five years. I was handling a transaction (selling a company) in the steel industry. I was negotiating the transaction with a broker in the US, who represented a Chinese buyer. They were starting due diligence when the Chinese government announced they would not allow money to leave China. The company had to withdraw from the transaction. While this not related to the supply Chain, it does show the power of Governments and how they can affect plans and the business.

My point is, dealing in the Global economy – we never know what governments will do but we need to have plans and alternatives to be prepared for dealing with the unknown. Therefore, these scenarios are discussed during the planning process so companies can have alternatives to react quickly on an informed basis and not have to scramble and be reactionary and not ready to make appropriate moves. Companies need to be AGILE.

In my experiences, I have found that companies with strong management, that have a VISION, a COHESIVE leadership group and have an agreed upon short and long-term plan are generally the most agile and successful companies.

So, some of the issues facing the business community and countries are:

  • Trade partners (old and new)
  • Tariffs (Effects On: Profitability; Supply Chain, etc.)
  • Environmental issues
  • Talent – recruiting and retaining
  • Keep up with technology changes
  • Country NEW trading alignments
  • Budget issues
  • Geo-Politics
  • Slow down in various country economies

How will any of these affect your business?

I sure hope you don’t answer that they won’t. Everyone will be affected by these issues in different ways – so be ready to deal with them – PLAN accordingly.

So, what are some of the strategies for managing through uncertain times?

  • Have a Business Plan
    • Every company should have a business plan that includes a 3-5-year financial forecast and evaluates opportunities available to the company, as well as potential downturns with the possibility of having to downsize.
      • Evaluate cost cutting
      • Evaluate the company’s debt structure
      • Have an HR plan based on needed resources going forward
      • Visit your supply chain to make sure you’re solidified and have alternatives
      • Maintain company profitability
      • Maintain a positive cash flow
      • Analyze product lines (profitability) and pricing. Eliminate low margin items (unless there is a strategic reason to maintain it)
      • Evaluate customer profitability and eliminate the unprofitable relationships
      • Properly manage inventories and be careful of purchasing
      • Watch and manage accounts receivable
    • Have a capital asset budget
      • Don’t be shortsighted cutting out the future
      • However, don’t sacrifice the short term for long term objectives that won’t be there if you don’t make it through the short term.
      • There is a balance.
    • Manage the business
      • Work on the business constantly
      • Provide strong leadership
      • Stay in tune with the business dynamics and economy
      • Have a dashboard that provides you with key indicators/metrics of the operations
      • Know your competitors and what they’re doing
      • Have a marketing plan
      • Be Agile – ready to change as necessary
      • Always keep in mind “STAKEHOLDER VALUE”
    • Have strong information systems
    • Build strong internal controls and processes and procedures.
    • Have an Implementation Plan
      • The best laid plans are only as good as the Implementation that takes place.
    • Have a strong Balance Sheet and make sure your Cash Flow stays strong as well. Remember, “CASH IS KING”.
    • Have measures
      • “If you’re not keeping score you are only practicing”.
      • “What gets measured gets done”.

Managing in uncertain times can certainly be challenging but can also be very rewarding if you are prepared for it and have a strong infrastructure. There will be difficult choices to make and new opportunities that arise. Be flexible in your thinking, stay liquid, have a plan, Analyze and reanalyze your business to improve profitability, keep morale high and make sure management, as well as employees, are committed to the program for the company to make it through the uncertain times and come out stronger than ever. As a business owner and/or manager – the destiny of your company is up to you. Remember, Stakeholder Value is key (this includes owners, management and employees, as well as customers and vendors).

Your destiny is by choice and not by chance. If you are not proactive to make change, somebody will make the change for you.

If you are uncertain how to start a program on how to build a plan and the infrastructure, then seek out advisers/consultants that specialize in this or call us at Experience On Demand. My direct telephone number is (314) 795-6014. Barry Worth, Partner