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Financially Sound: There Is Still Money To Be Made
Tips for entrepreneurs operating in today's economy
by Chris Cooper
May 30, 2008
R
ocky, turbulent, unsettled – these are words that dominate business discussions today. It
seems, and rightfully so, that entrepreneurs from all industries are dutifully and eagerly watching
the economy. Entrepreneurs throughout Georgia and across the country are metaphorically standing,
collectively, at a fork in the road and deciding minute by minute, without benefit of a crystal
ball, the best path they can take to move forward with their companies.
It is perhaps this group of
business people – entrepreneurs – who pay most careful attention and are most sensitive to economic
shifts because their names are on the door and their reputations are on the line. Ultimately, they
have more to lose if the path they choose proves less than effective when calmer days arrive.
Although a rocky economy is unpleasant, it is exciting and often presents opportunities that might
not develop in less chaotic times.
Atlanta’s enterprising business owners have a lot of questions and need guidance to operate
their businesses in rocky and turbulent business environment.
Often the sentence that typically follows rocky, turbulent, unsettled is this: This is the
worst economy I’ve seen in 20 years. At Georgian Bank, we concur, but it is important for
entrepreneurs to remember that pure gut instinct based on a lifetime of industry experience and
customer knowledge is the best source of information.
First, it is important to debunk today’s predominant myth infiltrating the business
community, which is this: “Funds have dried up from banks, so I can’t get the money I need for my
company.”
This statement is not true.
The competition for banking clients has been elevated from a battle to an all-out war. Banks
may be more cautious at this time; however, well-run, profitable companies continue to be supported
by their banks for operating funds and for growth.
The Kiplinger Letter stated recently that “most businesses” aren’t experiencing a
constriction in the flow of dollars as long as the businesses can demonstrate their financial
health, meaning, ultimately, the capability to pay back loans.
Banks are doing business, funds are available, and at most banks, deep banking relationships
are still the order of the day.
We have advised many of our entrepreneurial clients to change their mental model of the
environment. Turbulence creates opportunity – opportunity to deepen client relationships,
opportunity to navigate a different strategic direction, opportunity to instill new practices of
frugality. These opportunities are thrilling because when the waters become still, your company
will be streamlined, more efficient and more effective, thus more profitable.
Opportunity to deepen client relationships
During a rocky operating environment, it is imperative that you stay in touch with your
clients and prospects. If your clients are feeling the strains of the market, they will appreciate
your counsel, encouragement and support. Communicate consistently with clients, telling them about
your business and asking them about their business.
Most businesses today operate within a web of resources that could include not only clients
but also investors, vendors and joint partnerships. In a rocky environment, be sure to stay in
touch with your vendors. If you are a printing company, for example, and your binder vendor is
suffering, so too will quality, leading to missed deadlines, and more important, an unhappy client.
Stay close to vendors and look for opportunities to brainstorm and help each other out.
Opportunity to review strategy
When turbulence exists, it is imperative to maintain a laser-like focus on your strategy,
yet maintain enough flexibility to take advantage of ebbs and flows in the market. Spend time with
your senior leadership reviewing the tactical execution of your business strategy. Perform a
strategic review of the company’s direction, customers, vendors and employees.
Opportunity to manage costs
When the environment is unsettled, find opportunities to network and be visible without
spending large amounts of money. Instead of taking clients or prospects out to expensive dinners,
invite them to seminars or events on a topic you share in common.
If you own your own building, consider refinancing it while rates are low. If you don’t own
your building, now may be the time to buy because rates are low. Another item to consider when
managing costs is taking advantage of discounts on payables, if offered. Even a 1 percent discount
for paying at 30 days is significant when interest rates are low. Along those same lines, take a
look at your aging receivables. Now is a good time to put extra effort into collecting those slow
pays.
Exit Strategy
A final point to consider is your exit strategy. Perhaps this economy presents a good
opportunity to consider marketing your business for sale as a part of your overall strategy. While
the stock market might be down, there are still plenty of high-net-worth individuals and companies
looking to buy.
In my 35-year career, I’ve experienced and counseled clients through many economic cycles,
and I’m always reminded that a cycle is just that, a recurring market period with an always
definable beginning and end.
Chris Cooper is executive vice president of Georgian Bank, Private Banking.
