Don Roberts tells CSIA members how to survive the recession

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#Pauto 

 

Don Roberts of Exotek is talking about how to survive the recession. Don knows, because he is the senior auditor who manages the CSIA Certified Member Audit Program.

Here's what he says is important:

Survival and Growth in These Trying Times

Topics:

Market
Customers
Employees
Banks/Cash
Vendors
Management
Other

Markets still showing life
Infrastructure…..But
Energy
Test
Green
Exercise caution when moving to new market
Know your limitations
Turf will be defended

This is a global issue
Think globally broaden your portfolio
Expect global competitors
Some companies will disappear
If you have staying power, make sure the market knows

Capital spending is at an all time low
Up front engineering still an option on projects
Material may not be purchased
Encourage customers to take this route to be ready out of the gate
Relationships are key
Do you have order takers or sellers

Customers...

The internal organization is changing
Budget restrictions
Current contacts may not have the same authority
Approvals at a much higher level
Need to track the changes

Go the extra mile with loyal customers
Ensure they keep coming back
Never underestimate the power of great customer service
Sets you apart from the competition – especially in these times

Employees...

This is a complex and personal issue
401 (K) match a thing of the past
Cross the board cut in pay
X number of weeks off without pay
Use temporary layoffs
Move to more of a variable compensation

Forced ranking
Fix, replace, or remove
Communicate often
These are scary times
What they don’t know they will invent and it will be bad
Encourage bi-directional communication


Banks/Cash Management...

Reserves are critical
Don’t use up all your cash
Negotiate more every chance you get
Banks are more likely to call a loan
Or at least threaten
You just need to be better than the rest of their portfolio
You can’t communicate too much
Those with cash are in a good position to do acquisitions

Low interests will be temporary
Have a big reserve
But don’t get too far into it
It will be much more expensive in the future
Improve cash flow projections
12 week for whole company
Project cash flow on large projects
Don’t let your customers use your money

Vendors...

Get close to key vendors
They are struggling too
Do joint targeted planning
Extend terms…but meet your commitment
If you are going to be late with a payment let them know
Triggers are set very tight

Management issues...

Be proactive
Spend time planning
Hope is not a strategy

92% of small business owners believe they can withstand financial difficulties, almost two-thirds were so confident that they had no contingency plan in place in the event of an economic downturn
--Harris/Decima 2009

KPI management
Develop list
Reflect against prior periods to baseline
Establish triggers that will initiate action
Define the action in advance
Monitor closely

Be prepared to deal with complex and personal issues
Leadership is critical
Tough minded leadership required
View this as a permanent condition
Holding your breath could be fatal
Internal projects and R&D could deplete cash reserves
can you afford it

Develop contingency plan – plan for moderate to worst case scenarios
Expect the worst and you won’t be disappointed
Be a boy scout - Be prepared
This too shall pass – but don’t try holding your breath waiting for it to do so
Lessons from prior down turns show management wait too long before acting
Know your risks – develop risk management plan
This should apply to business as a whole as well as projects
Plan for how you will deal with key parts of business plan that do not materialize as planned – be real
Don’t hold off making key decisions hoping for a turn around – hope is not a strategy
Act in a timely and decisive manner
Putting off dealing with a negative situation just undermines the credibility of management, not to mention it is likely bad for the bottom line
What mode is your company in
Be honest about assessment
Growth, Survival, or Wind-up

Credibility of management is important
Communicate often and honestly
Now is not the time for spin
When people don’t know they will think the worst

Talk with your peers
Consider experienced external advisors
Commercial banker
Lawyer
Industry experts
Stay informed

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