Survive and Prosper.
How does one position oneself to not only survive a down economy but to prosper during the difficult times?
Evaluate market opportunities. One option for companies positioning themselves to defend against economic pressures is to consider merging or purchasing other companies. Instead of closing up shop, cutting costs, laying people off, and doing everything else you can do to keep from going under, companies can look for new solutions. Teaming up with an established company in another market can help shift assets to more meaningful work, and help deflect some of the pressures felt at home. Establishing a presence overseas is one way to set a company up for more aggressive growth down the road.
Insist on written contracts. Written contract allow both parties to know the expectations of the other party, the contract is the proof that there is an agreement. Avoid the expense and uncertainty of having to prove to a judge what the terms of your agreement were by having those terms written.
Enforce the terms of your agreements. If the customer does not pay on time, do not continue doing work or making deliveries to the customer. If you haven’t been paid in 30 days, do not continue to supply services, material or labor, or you can be getting yourself further indebted to your customers. You will be more successful if you seek payment early while there is still money and a well written contract will provide that the debtor has to pay attorney fees and interest on contracts that go to collections.
Collateralize your agreements. Protect yourself by collateralizing your accounts receivables where possible and filing the appropriate UCC statements. Taking a security interest can also help you gain priority against other creditors.
Evaluate you customers. If the customer is a small company or even a one-man operation, consider obtaining a personal guaranty for the work and products delivered. If a business is having financial difficulties and they have two bills to pay, and one of them is personally guaranteed, the bill personally guaranteed will be paid first–simply because that bill will cause the owner personal liability and therefore is more urgent.
Protect your intellectual property. Require third parties to sign confidentiality agreements. Protect your ideas by registering copyrights, trade-marks and patents. Use exclusivity and non-circumvention agreements with contractors, suppliers, customers, and others.
Mind the basics. Take this slow time as a time to get your “house” in order. Update your minute book. Review company minutes and ensure that they are all present and complete and make sure owner equity is properly documented.
Take advantage of the opportunity a down economy can offer. Refine and focus your business and its practices and you and your business will prosper.