Business Survival Planning Strategies

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Business Survival Planning Strategies
Kelly McDonoughPresident/CEOFirst Alliance
Credit Union
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Vehicle SalesMonthly Data, SAAR
Latest December 2008
Thousands
Source Commerce Department and Economy.com
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Retail Sales (Millions, SA)

Source Commerce Department
4
New Home Sales (Thousands, SAAR)

Source Commerce Department
5
Existing Home Sales (Millions, SAAR)

Source National Association of Realtors
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Source Commerce Department
7
Source Federal Reserve Board
8
Source Federal Reserve Board
9
Source Federal Reserve Board
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Nonfarm Payrolls Monthly Changes SA
Latest December 2008
Source Labor Department
11
December 7.2
Source Labor Department
12
Consumer Confidence
1980 to Present
December 38
Source Conference Board
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Negative Downward Spiral
Falling Home Prices
Falling Household Wealth
Falling Household Spending
Lower Income
Self-Reinforcing Spiral
Rising Inventories (unsold goods)
Lower Factory Production
Increased Unemployment
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Mortgage Crisis
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What can you do to protect your business and
survive these times?

• Review budgets and income projections
• Change expectations
• Manage access to liquidity (cash)
• Consider workforce reductions
• Prepare and educate your employees

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Income

• Review your historical time frames for income
  projections.
• Consider shortening it to most recent three
  months.
• Review data from previous recessions to estimate
  impact on revenue.
• Never a better time for professional networking.
• Work relationships with existing customers

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Expenses

• Evaluate expenses to find areas of greatest
  impact.
• Defer capital projects
• Examine all small contracts
• Shredding
• Cleaning
• Plowing
• Landscaping

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Consider Workforce Reductions

• Let staff go to attrition
• Consider job sharing arrangements
• Consider reduction in hours
• If layoffs are possible.prepare your employees

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Consider Reduction in Benefits

• Health
• Life
• Disability
• Dental
• 401K Match Discretionary

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Consider ways to reduce benefit costs

• Eliminate programs
• Change vendors put contracts out to bid
• Change terms of coverage
• Higher deductibles
• Higher co-payments
• Employee cost sharing
• Family coverage

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Manage Liquidity

• Build cash reserves
• Good time to buy on credit
• Cost is low
• Preserve cash
• Establish or extend access to credit lines
• Consider business credit card limits
• Talk with your financial institution

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Prepare your employees

• Encourage them to build cash reserves
• Involve them in creating solutions
• Encourage them to build access to liquidity
• Encourage them to seek assistance BEFORE they are
  in trouble
• Encourage open relationships with financial
  institutions
• Encourage financial counseling services

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Thank You!
For questions or for more informationkmcdonoug
h_at_firstalliancecu.com507-288-0330