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t is management’s job to be able to assess the operating environment for today and tomorrow and to adjust to the changes as they occur. Disruptions will occur and reoccur. Ideally, managers should pick up early on the trends and reposition the company before
there are any lasting detrimental impacts from these “outside” forces.
All of the FACTORS in the following areas of the business have a notable effect on financial results. All of your plans, even in a crisis, should take these factors into account. Let’s take a quick look at the full list, so you can better understand that statement and, in some manner, rank the level of input priority each group of factors should have … first in survival plans and then in longer-term thrive plans.
General business cycle
—assess how long it may be to reach a full recovery.
International economic factors
—understand what may hit your plans.
Government policies
—include the positive and negative actions anticipated.
Long-term trends
—plans should be structured to thrive over time.
Structure of the marketplace
—fully appreciate what has and will change.
Level of competition
—constantly survey and gauge your competitors’ respective strengths.
Capital intensiveness
—know early what new equipment will be required.
Long-term trends
—integrate these effected trends into your thrive plans.
Sales and marketing process—
emphasize revenue generation … don’t cut here.
Production operations
—plan and demand effectiveness and efficiency.
Human resources management
—stay lean and use overtime if needed.
Long-term trends
—be aware of the limitations of talent and critical skill sets.
Interpretations of accounting statement data
—use these tools effectively.
Financial condition and outlook
—don’t expect too rapid a recovery.
Long-term trends
—keep debt and reserves at prudent levels.
Corporate governance
—watch for changes and assure compliance.
Litigation issues
—new problems may arise … beware.
Government regulations and taxes
—use all available provisions to conserve cash.
Long-term trends
—don’t expect some temporary regulations to ever be dropped.
Level of inflation (or deflation)
—know what to expect and the financial impact it will have.
Cost of debt and equity capital
—read the text on this topic and minimize your debt.
Level of investment risk
—assess and reassess the known areas of risk.
Long-term trends
—project and integrate these into all uses of capital.
You can survive through a seemingly debilitating business crisis. To do that and get the best short-term gains without negatively effecting longer-term results, really think about how each of the listed factors will impact your three types of plans. (Plans to help you Survive, Build a Foundation, and Thrive.). Develop your survival plan by thinking about and ranking the amount of influence these different factors will have in the short-term. As you move on to your foundation building period and thrive plan development, appreciation of the longer-term waves creating these factors must be considered.