As already mentioned in our recently published article “Use a stagnation and recession as a business advantage“, companies are, sooner or later, facing an economic downturn or maybe we already entered into it. Depending on how well prepared a company is and what strategy is used, this can be used as a business opportunity.
To maximize the possibility to come out stronger on the other side, companies must both optimize the cost structure (as we discussed in the previous article) and also secure access to capital and a good cash position well before the downturn starts.
Securing access to capital will be key to enable your company to keep evolving in times when profits are under pressure and the overall flow of cash is reduced. It will allow you to continue with strategic investments, enforce creativity and new ideas, maintain or even gain competitiveness while securing a solid foundation for the future.
Start looking within the company itself
Depending on the industry, company set-up, ownership or financial status, capital can be more or less hard to access but, a solution possible for all companies at all times, is to start by looking within the company itself. Would it be possible to release cash already at your disposal but tied up in your own operations?
Managing your working capital, i.e. the capital required for running your operations (Accounts Receivables, Inventory and Accounts Payables) more efficiently, can release cash and give you just the financial strength to continue to evolve. Why not utilize this opportunity to secure your future liquidity?
Manage your working capital
- Invest in leaner processes securing more efficient capital turnover
- Make use of the situation to negotiate better terms with your customers and suppliers
- Utilize bank offers to finance the supply chain
- Find effective financing options for long lead times in order for your company to be better prepared for a more difficult future.