You’ve heard it a million times; what comes up must come down. The flip side for successful people is the realization that what goes down, must come back up. I’m speaking to the price of commodities, particularly oil & gas. The million dollar question is how do you plan to ride this downturn and be positioned to take advantage of the growth when it comes back? Having worked with small and mid sized contractors for over 20 years, I have witnessed business owners work both realities by embracing these 3 strategies:
- Tear up last years strategic plan and do a new one immediately. Take pride in your ability to change and adapt – not in the plan you worked so hard to complete last year that is now useless. The phrase “put your big boy pants on and get over it” comes to mind. CEO’s of large companies envy the nimbleness that small businesses owners have – use that gift as a tool to succeed.
- Buy your CFO, Bookkeeper or Accountant Lunch. This is the time to know your break even and cost structure more than any other time. Working with your advisor and pouring over your cost structure (could be your spouse/bookkeeper at the kitchen table) will help you understand your options and how to act on them. This will give you peace of mind.
- Clutch the Cash.Over the past few years you may have simply ‘stroked the cheque’ simply because you could and it was faster than waiting for lenders to make decisions. Chances are now your cash is decreasing and so is the willingness of your bank to increase your line of credit. If an asset needs to be purchased, use leases and term debt responsibly – there is no shortage of lenders willing to write deals. Cash in the bank will gives you the ability to take care of emergencies or more hopefully opportunities as they arise – hold onto it.
What are you doing to mitigate this market and take advantage of the next? Feel free to share your experience so others can learn from your success.