Many companies are addressing today’s economic uncertainty through scenario planning. This strategy is particularly effective when facing a situation of uncertainty fueled by a variety of factors such as government policy, consumer response and Wall Street to name a few. The key to scenario planning is identifying trends as quickly as possible and implementing the necessary corrective action.
Regardless of the scenario used, there are three areas (referred to as the 3 – C’s) that must be prepared for. The 3 – C’s will be the key to any strategy that is decided upon:
- Cash is integral to the survival of any business. Companies need to make sure that assets such as Accounts Receivable and Inventory are maintained at optimal levels with Day’s Sales Outstanding (D.S.O.) and Inventory Turns as key benchmarks. Cash can be used to pay off debt, negotiate vendor contracts to take advantage of vendor discounts and for strategic investments.
- Customers need to be catered to and improving customer service is paramount. The costs related to acquiring new customers far outweigh the costs of maintaining them. Studies and surveys of sales and marketing professionals show that referrals can be of great value in generating new sales.
- Credit lines, whether needed or not, are important and securing lines of credit often takes longer than expected. Strategic acquisitions and investments are out there and should always be considered.
As companies look to effectively address the turbulent times being faced by everyone, it is important to remember that long term growth is often derived by strategic investments whether in the form of acquisitions, or in cutting edge business software such as a
Alan Cohn, CPA, MBA,
Since 1985, Micro Force has been serving the New York Metro region as the Largest and Most Experienced GP-Only Gold Certified Partner.
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