“I have heard there are troubles of more than one kind. Some come from ahead and some come from behind. But I’ve bought a big bat. I’m all ready you see. Now my troubles are going to have troubles with me!” – Dr. Seuss

The business news over the past few days has been somewhat grim — and especially unkind to some well known brands and consumer products. The stock price of Bed Bath & Beyond has dropped by 60% due to cash flow concerns and the sale of a significant stake in the company by one of its high-profile investors. Additionally, the Regal Cinema chain has announced that it will be filing for bankruptcy after seeing attendance decline precipitously due, in part, to the impact of COVID and tough competition with streaming platforms who are more efficient and cost-effective for the consumer. And did someone say that inflation is higher than normal?

It’s easy to get discouraged reading the news of these big businesses and their expense reduction moves. Although not every business is impacted by the macro-environment, there certainly does seem to be a general slow-down in consumer demand across many goods and services. However, history tells us that many companies emerge stronger than ever after recession-like periods.

And so the question is: if you’re a small business owner, how do you prepare yourself to endure an economic slowdown?

1. 1. Be Transparent: You must know your customer, their thought processes, and how they perceive your product or service. Are they price conscious? Do they value customer service and/or the quality of product you’ve designed? Do you have a strong kinship with your consumers and understand the need your product or service fills? It’s always easier to maintain current customers than attract new ones so during times of economic uncertainty maintaining your current clients is vital. And it is especially important to reach out to your current customers and remind them you are as loyal to them as they are to you. Showing appreciation can be anything from a “How are you doing?” phone call to special product offerings that are unique to specific tastes and likes. The main idea here is to connect with your customers — which will result in a stronger bond and increased loyalty.
  2. Be Smart: Our clients and regular readers of our newsletter know that we always advocate strong budgeting, forecasting, and planning to ensure that performance is meeting expectations and goals. As we enter the last third of the year, it’s not too early to start planning for 2023, while continuing to examine the remaining months of 2022. And while entrepreneurs, by nature, are optimistic, it’s more important to be realistic — and maybe even a tad cynical — when trying to determine how the next 12-18 months will look like.
  3. Be Conservative: When we say be conservative, we are speaking strictly in terms of making significant financial investments in your company, like a new product line or acquiring a competitor. Because of the current inflationary environment and the Fed’s commitment to keeping inflation to a minimum, interest rates will continue to rise. That means borrowing costs will also increase, thereby restricting access to capital and making loans more expensive to obtain. Cash flow is the key to a company’s ability to survive and thrive so there shouldn’t be a significant outlay of cash that could potentially impact short term ability to pay bills on time.

Does all this mean that we are not optimistic about the future? In two words: Hell.No.

Small business owners need to be able to adapt to changing times and circumstances. As CFOs, we always encourage transparency and intelligent, prudent decision-making. Yet, there is no reason to believe that your company cannot prosper at a time when the global outline is not as optimistic. Remember the core strengths of your company and your management team — and make sure that you remain focused on the goals you established at the beginning of the year.

“I can be changed by what happens to me. But I refuse to be reduced by it.” — Maya Angelou

Take-away: If your company needs experienced finance leadership to guide you through good times and challenging times, contact Brian or Scott for a free diagnostic at info@accelearatingcfo.com.

Brian Califano