What are your indicator factors as a sign of returning confidence in the economy? I posed this question to a few business colleagues in early summer. Oscar Jazdowski of Silicon Valley Bank (Growth Companies Services) is looking for 2-3 consecutive months of flat unemployment. Currently, unemployment is still going up, making it the highest in 25 years, but the Index of Leading Economic Indicators has shown growth each of the last 4 months. So running a business, what should you be aware of and plan in the near future?
Laura Kevghas of Mirus Capital is beginning to see an uptick in the strategic buyers who have money in the bank and are beginning to consider acquisitions once again. She states that strategics have seemingly had their wallets closed, but are now starting to consider making some acquisitions that fill a strategic hole or which will help grow their market share when business starts to turn around. Ms. Kevghas also points out to be on the alert if one strategic is interested in your business, there may be others as well; so it may be worthwhile to engage an investment banker to run a complete process.
Conservation of cash and strong management of your working capital is still a top priority. Oscar Jazdowski recommends being ready for an upturn by having a pool of contract labor and more permanent hires that you can quickly engage. Now is the time to work out several road maps or scenarios that will give you a competitive edge when the overall economy improves.
With this focus on cash management, you want to make sure you plan multiple scenarios over the next 6-12 months so that you can navigate optimally and be proactive. You want to have these strategies mapped out financially to fully understand the ramifications of your future decisions. I call them your NSS Financial Headlights™.
Strengthen marketing and sales during this economic growth, albeit slow, and keep your business out in the market – visible and ready to respond, suggests Laura Kevghas.
In my opinion, it is also an opportune time to evaluate your exit strategy. Where do you want your company to be in 3-5 years? Consider succession planning and optimize market value and consider this long term plan in your annual budgeting process.
Send us an email or call us at 617-449-7728 to discuss how we may help you build your business and give you a competitive edge with our expertise in strategic finance.
Rudi Scheiber-Kurtz, CEO of Next Stage Solutions, Inc.