Knowledge Base - Responding To The Economy

Position Your Business To Capitalize On the Upturn

In an economic downturn, it is important to realign your cost structure to the current revenue levels. However it is equally important to take steps to position your business to capitalize on the upturn.

Here is a list of actions that will help both during the downturn and when the economy improves.


  • Use an interactive financial model to evaluate what if scenarios.
  • React to current conditions not conditions you wish existed.
  • Keep the calculation of your cash break-even up to date and manage your business with that in mind.
  • Make use of trusted outsiders to help ensure you remain objective.
  • If you get into a jam, honest communication is key. If you make promises, keep them!
  • Keep up communications with your lender. Make sure you don’t give them any surprises.
  • Keep an eye on your competitors and be prepared to move if they falter.

Sales and Marketing

  • Focus on segments of your business that are hurt the least by current conditions i.e. food vs. auto.
  • Focus on customer retention and reactivating former customers.
  • Evaluate why customers are not buying and address any factors you can control like offering a lower cost, no frills alternative or extending payment terms.
  • Make sure you stay close to your key accounts. Your competitors will be gunning for them.
  • Re-position your message to deal with current realities, i.e. promote your equipment rebuilding services not just new equipment sales.
  • Step up marketing communications you are positioned to take full advantage of the upturn.


  • Re-evaluate your strategic goals. Have your employees stop all activities that do not directly support these goals.
  • Watch your productivity. Employees have a knack of stretching workload to fill the time available.
  • Use updated forecasts to drive staffing levels
  • If you have to consider layoffs, do so decisively.  Make cuts as deep as you need in the first pass. Nothing sends a message that you have turned the corner better than recalling laid-off workers.
  • Use the tight job market to upgrade your staff.
  • Encourage use of vacation time now so employees are available when things pick up.
  • To keep your good employee base intact, consider a reduced work week for everyone or rolling layoffs of one week off one week on.

Cost Control

  • Monitor your accounts receivable aging and step up your collection actions
  • Adhere to your credit policies. Don’t pick up your competitors credit problems.
  • If revenue is down, a company’s cash position tends to improve as you collect old receivables and have lower current costs. This can lead to a false sense of security.
  • Use a rolling 13 week Cash Forecast  to stay informed on your current  cash position.