THE RECESSION RESPONSE
The Small Business Economic Crisis Financial Management Plan
RECESSIONRESPONSE.COM
CASH FLOW
REDUCE CASH OUTFLOW
3 Cancel no/low benefit expenses
(e.g. app subscriptions, entertainment)
3 Business owners cancel no/low benefit personal
expenses (reduces personal income need)
3 Renegotiate terms with required recurring and one
time expenses (lease, capital equipment)
3 Seek new terms/extensions from vendors/suppliers
INCREASE CASH INFLOW
3 Proactively address borrower/lender matrix to ensure
continued cash flow
3 Introduce new payment options
(0% financing, credit card, ACH, cash discount, etc.)
3 Use the “what can you afford?” strategy
with at-risk-for-defaulting clients
3 Don’t change your Profit First percentages (yet)
DEBT MANAGEMENT
DEBT CONTROL
3 Don’t take on new debt to maintain
“business as usual”
3 Use extreme caution with debt leveraging
(use of debt for high probability returns)
3 Use extreme caution with debt bridging
(use of debt to cover short term cash flow dips)
3 Renegotiate debt for better terms
(interest, installment frequency, length of loan)
DEBT PLANNING
3 Consolidate and refinance debt
3 Maintain excellent personal financial status to keep
high credit rating if debt needed
3 Avoid credit card debt (avg. APR 17.3%)
(0% starts can go to 29%)
STRATEGIC PLANNING
MAINTENANCE
3 Schedule regular (weekly/bi-weekly) financial debrief
with financial/profit advisor
3 Evaluate offering mix, focus on high margin products/
services (reduce/remove low margin)
3 Evaluate client mix, focus on historically financially
well paying clients
3 Enhance communication rhythm with clients
(more frequent, shorter communication)
GROWTH
3 Opportunity to focus recession resistant clients/
opportunities (staples, food, vice, funeral)
3 Market to the Transitioning Ten Percent clients leaving
large competitors
3 Enact “bold” moves – acquiring unprepared
competitors, amplify marketing, raising prices
ACCOUNTING
PROACTIVE
3 Set up new GL Account(s) for unique circumstances
(eases reimbursements and recasting)
3 Evaluate inventory turn. Tighten turn on moving
product, eliminate non-turning products
3 Review accounting system automated invoicing
collection sequence (verbiage, frequency)
FUTURE PLANNING
3 Conduct comparative analysis of prior years,
months (distinguish cause and effect)
3 Evaluate client history to proactively determine where
you can make terms concessions
TAX
PROACTIVE
3 Treat tax estimates as due on April 15, June 15, Sept 15,
Jan 15 (even if extension occurs)
3 Start or maintain a bank account for TAXES
ADDITIONAL RESOURCES
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