• RSS Feed

  • Free Skype Call

    Skype Me™!
  • Twitter

    NZbizadvice on Twitter
  • Testimonials

    "Mark has been working with me since May 2004 on many aspects of my business.

    He is very approachable & offers me practical advice and his communication skills are excellent. I would have to say Mark gives his all and is determined to help his clients succeed".

    Owner, Small Pet Shop

    "Mark Gwilliam and his team at Business Advisory Accounting & Tax Services has been my full service accounting department for many years for my companies.

    I rely on the fast, friendly and accurate information they provide me to analyse and concentrate on running my business. Any information that I need is readily available. To eliminate the costs and hassles of in-house accounting, I highly recommend Mark's team."

    Owner, Medium sized building business
  • Recommended business products

    Domain Registrations starting at $9.98* Stock Photos, Royalty Free Stock Photography, Photo Search

When Markets Turn: 7 Ways to Batten down the Hatches

The bursting of the subprime mortgage bubble isn’t something new – or unique. There have been other inversions related to the money market before. The 1930s stock market crash, the reverses of 1975 and 1982, the 1987 debacle, the late 1990s dot-com speculation all follow the pattern of greed and fear, which some people say are the only two emotions governing the movement of stocks. When people want more, safeguards are bypassed and the soundness of investments and products is overlooked in favour of speculation. The downturn that follows can be considered a sort of correction, albeit a drastic one.

We’ve already seen and are continuing to see the effects of the present financial crisis. Though pretty small in terms of actual damage done, the subprime crash has far-reaching effects that threaten to depress not just financial markets, but other fields of business as well. What can you, as a business owner, do in order to ride out the storms that are coming?

Ways to Ride Out a Downturn

#1 Plan, Analyse, Re-Plan

When times get difficult, it’s the companies that don’t pay attention to the basics which flounder. A business with an up-to-date contingency program can devise strategies to cope with unexpected turns and losses. It’s vital to have a business plan which addresses bad times, which answer a lot of “what if” questions. What if the cost of raw materials rises? What if we lose our number one customer?

The frequent reappraisal of your company’s plans can also serve to alert you to potential danger, such as delinquent accounts, declining margins, and so on.

#2 Maintain Relationships

In hard times, you’ll need all the goodwill that you can get from your clients, suppliers, networked agencies, etc.

#3 Focus on Business

#4 Stay Trim, Stay Fit and Save Money

When times are good, people tend to not scrutinise costs too much and to stop looking for ways to save money. This results in cost inflation. In personal health, it’s much healthier to stay at a moderate weight than pig out and then go on a crash diet. The same goes for companies as well. When a downturn comes knocking on your door, it’s important not to get caught owing a lot of money.

#5 Adjust and Adapt

#6 Diversify

#7 Look for New Opportunities

To do well during a downturn, you have to stay focused on the most important elements necessary to a business such as accounts receivable, costs, debts, and cash flow.

A downturn can actually be a time for well-positioned companies to accrue market share. While everyone else is getting their heads down and concentrating on the essentials needed to ride out the storm, the savvy entrepreneur can be capturing markets by redefining his/her service or introducing new products. The best thing about it is the fact that competitors can’t or won’t be able to respond in kind.

Don’t get caught waiting for a return to the old market. Each downturn leaves the business environment changed, in ways that are sometimes unpredictable. It’s much better to base your future actions on the premise that future methods of doing business will not be the same. Markets will shift, and opportunities will arise elsewhere. Each downturn is, after all, an episode in the continuing evolution of business markets and models.

Add a comment