While the Economy is Starting to Slowly Improve, What Should You Do Right Now?
By Jack Lyons
President, Lyons Solutions LLC
Everyone’s in agreement: the economy is doing better again. Businesses that were hurt in the recession have generally stabilized or recovered either wholly or partially. Profits are up for most companies. We already see a rebounding automobile industry and the stock market is reaching heights not seen in years. Things have gotten better, there’s no doubt about it.
While this economic environment is likely to last for a while, there’s still a lot of uncertainty for businesses due to political uncertainty. Right now, unemployment is falling, and both consumer and business spending is increasing. But it’s been a weak recovery with many non-participants. It appears the gloom and doom that was prevalent six months ago is being replaced by guarded optimism. The truth is that no one knows what is going to happen after the presidential election later this year. Will the recovery continue or will we slip back into a weaker economy again?
Here’s a few solid tips to protect your business now and for the long run:
Minimize the Debt You Incur (or Stay Out of Debt Completely!)
In good times, a prudent amount of debt can help companies to increase their sales and profitability. However, in bad times, debt is like added weight to a sinking ship; it causes a business to go under when economic times get rough. Becoming so leveraged with debt will hurt your company if the economy changes negatively. Companies that are overly leveraged always seem to regret this later. While some believe hoarding cash isn’t always the wisest of decisions, during these economic times, it gives a company staying power.
If expenses stay in control, profits will be maximized. Now is not the time to over-invest in the hope of major revenue increases. It is a good time, however, to delay making decisions on major investments and follow a middle-of-the-road strategy. If the economy continues to improve after the election, you can always decide then the best action to take.
Rather than delegating the running of your business to someone other than yourself, take charge of it. Stay on top of what is going on so you can make adjustments quickly. Remain interested and be pro-active in the daily activities of your business. The economy is still too fragile and in most situations, no one runs your business as well as you do.
Stay Close to Your Customers
It’s always a good idea to stay in close contact with your customers. This will enable you to better understand what is going on in the market and swiftly meet the changing needs that will arise. If at some point in the future the economy weakens, being in close contact with your customers may be your best and earliest warning signal.
Keep Your Credit Tight
Emphasize collecting your accounts receivable as quickly as possible. Since there are still a lot of weak companies out there, it’s very important to review the credit terms and status of each of your customers on a regular basis. Take steps to minimize the risk of not getting paid in the event that any of your customers get over extended with you. Don’t let accounts receivable risk causing financial issues in your company.
Cash is always king. If you stay liquid, your business won’t fail even if it feels the impact of a down economy. Think of your business as a long-term investment and make your decisions based on the long-term staying power you want to have.
To discuss what your company should be doing right now, call Jack Lyons at (941) 497-4700.
© Copyright 2012 Jack Lyons. All Rights Reserved.