Issue link: http://psai.uberflip.com/i/1150295
W EEKLY EDITION JULY 31, 2019 Pr ep a r e N ow f or t he Up c om i n g R e c es s i on By Karleen Kos, PSAI Executive Direc tor The fact is that every boom cycle in history has sooner or later ended. Whether it happens soon or somewhere down the road, the only real question is if it will result in a comparatively soft landing or another crash. The answer to that is not somethi ng any one company can control. The bigger issue for your company, then, is how can you prepare your business for the next recession, regardless of when it comes or how hard it hits? Here are the top recommendations of business experts: 1 . Protect Your Cash Flow. Remember, a recession doesn't happen all at once. Over a few months you'll see a gradual falling off of customers or quantities of equipment they purchase. This means you need to simulate your cash flow if revenue were to drop 30%, 40%, or even 50%. You need to know how your business will survive if revenue slows down. Furthermore, look at your operating expenses and delve into what can be cut if the business were hit hard. You don't want to trim things down without prior planning; being in a panic i s the worst way to make good business decisions. So make sure you have your game plan ready to implement when you notice the economy slowing in your market. 2 . Reconsider Inventory Management Procedures. No matter how long you've been in business, you have money invested in inventory like deodorizer, toilet paper, spare parts, and other consumables. To prepare for the downturn, think about what you can do to reduce inventory and the money tied up in it without negatively affecting quality or customer service . Are you buying and storing too much product? Can an item be sourced somewhere else at a better price? Is there a drop - shipping or pick up alternative that will work so you can eliminate transit costs? Remember, practices that make sense when business is booming — such as ordering large quantities and storing it — may make less sense when business is slower, especially if the products have a shelf life. Know how you can re - think these things ahead of time. 3 . Proactively Manage Your Debt. Do what you can to reduce your debt while times are still good. This will give your business more flexibility when the economy slows. Pay off debt aggressively if you can afford to do so. If you can't do that, pay as much as possible on your highest - cost balances first and pay down your personal debt in the same way. This will reduce your headaches if business slows and you need to cut your personal income. If you can't pay down debt, make sure you have secured the lowest interest rates for which you qualify. 4 . Shop Y our ins urance policies. You always want to make sure your business is protected with good insurance coverage, and it's a best practice to go through your policies from time to time regardless of what is happening with the economy. P AGE 8 CONTINUED ON PAGE 9