Well, after a pretty strong 2019 we’re truly in the toilet, economically speaking. The still active COVID-19, protests over police behavior and BLM, and the shut down/open up/shut down again guidance from our elected officials have pretty much guaranteed this is going to be a very bad year for many businesses. The question to as yourself is this: Does it have to be a very bad year for your business? We last answered that question for readers back in 2008, the last time we were faced with recession. The answers then were good enough to be repeated here, because evidence indicates that clients and readers who had the information at hand to protect their businesses and prepare for a stronger recovery did just that. Here are 4 reports you should have on your desk and 3 tips for allocating scarce resources that will ensure you’ll come out of the gate better than your competitors.

First, my 4 reports – top tools for protecting your business:

  • Report #1: Your minimum cost of doing business – your fixed nut, or as a client once called it – LODO, Lights On, Doors Open.
  • Report #2: Your earned Contribution Profit on each major item you sell, and on each of your top 10 customers. I’ve never seen a client not be flabbergasted when they saw this report for the first time.
  • Report #3: Your projected cash flow, in detail, by month or even by week if it’s tight, so you KNOW when you’ll need to tap your bank (assuming you’ve already taken advantage of any government aid programs available to you). Don’t forget loan forgiveness or repayment obligations.
  • Report #4: Your detailed P&L report in trend format – month by month, side by side, for 12 or 13 months, so you can see trends as they develop before they overwhelm. A 1-2% drop from last month is probably nothing; a 1-2% drop each month for the past 6 months is dangerous if you don’t know about it.

And my 3 tips for preparing for the recovery:

  • What projects are you currently investing in that you could postpone for 6 to 12 months without hurting your business today? Put them on hold and keep the money in the bank.
  • What projects have launched but aren’t  producing the results desired, requiring more funding to keep them going? Consider dropping them or putting them on ice for now, until later when the climate might make them more appealing to your customers.
  • NOW, where can you make an investment that will position you for market share gains when things turn around, as they always do? This is how you get ahead of the competition by seeing further than they can, and having the resources to back up your insight.

Want help? We do that. We are Your CFO for Rent.

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