The recession in Ireland is taking a heavy toll on many SMEs. Recessionary symptoms of falling sales, tightened margins and evaporated credit have been too much to absorb for many industries.  Many business owners and managers, besieged and on the back foot, are seeing their trade contract and are struggling to survive.

When trading through rough times, those that are best prepared are more likely to outrun their competitors in the recession footrace.  The Seven Cs of Business Recovery aims to present a blueprint for beleaguered owners and managers to not only beat the competition and the immediate financial crisis in their business, but also to streamline, invigorate and remould their business plan, to ride the inevitable upsurge and prepare for resurgence and renewed growth.

But firstly, if you are confronted with a financial crisis; don’t panic.  Remain calm.  If you do not, your staff, your bank and your creditors will lose respect in you.  In fact you will soon end up losing respect in yourself.  Work your way through the Seven Cs with a clear head.

The Seven Cs of Business Recovery

1. Counsel
At an early stage, it is very important to be able to seek counsel and take advice. When the “wolves” are at the door it can be nearly impossible to make correct decisions. It is vital that somebody with fresh eyes looks at the business from an independent and dispassionate perspective to assist you in drawing up the best recovery plan possible.

2. Communication
In essence, the business owner or manager struggling to meet financial commitments must endeavour to deal with their lenders and creditors as openly and honestly as possible.  You will be amazed at the goodwill that such a policy can generate.  The ability to effectively communicate your current and projected financial position is vital in gaining the time necessary to bring about the recovery of your business. When you cannot give your creditors payment within terms, give them the courtesy of the truth.  

3. Cooperation
Any recovery plan that does not have all staff members completely behind it is doomed to fail before it starts. Unless the business, and all its stakeholders, pulls together, there is little chance of recovery.  Adopting a positive attitude is one of the primary duties of owners and managers as the tone for everything the business does is set from the top down.  

4. Clarity of Purpose
Clarity of Purpose is all about tearing up your old business plan, which is unlikely to have taken account of the recession. Re-imagine your business. Evoke the sense of excitement and possibility that prompted you to set up in business in the first place. Correct course, strike a new position and recapture your entrepreneurial spirit.  Any business that does not continually innovate is doomed to fail.  Do things better: by doing them differently.

5. Costs
Cost control is the fifth key requirement for business recovery.  The effectiveness of cost cutting measures will be critical for a business trying to survive in an environment of diminishing sales, reduced access to credit and tightening margins.  The business owner or manager during a recession may also be confronted with the difficult necessity of making compulsory redundancies. However, although cuts in a recession are necessary they should be surgically delivered.  Avoid cutting though the “fat” and into the muscle of your business, as you could cause long term damage.  

6. Cash
The new reality is that credit controllers are now the key to businesses keeping their doors open. During a boom period the sales people are often the heroes of the organisation but the heroes in a recession are the credit controllers who quietly work in the back offices bringing in the money. It is a lack of cash that causes many businesses to fail in a recession, not a lack of profits. Cash control means releasing the ‘lockup’ of your business, i.e. the latent profit that is locked up in your stock, work-in-progress and debtors.

7. Customers
The golden rule of trading through a recession is looking after your customers. If you don’t, then somebody else will, and probably at a cheaper price. The business owner or manager must continually ask if there is anything else they can do for their customers or clients. When you receive a complaint you should treat it as a gift: it is free advice on how to make their business better.  When a competitor tries to undercut you, it is your relationship with that customer that is your safety net.  

Beating a recession is as big a challenge as any business owner or manager will face in their careers.  However, economic history tells us that sooner or later there will be a turnaround and employing the Seven Cs means that your business will be there, still afloat, leaner and stronger and taking advantage of the inevitable revival.    

Relevant Links
www.hughesblake.ie
www.examinership.ie