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Surviving an Economic Downturn Strategies to Improve the Financial Life of your Company Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Surviving An Economic Downturn

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Our CPA firm presented simple steps that businesses can take to survive the current economic downturn and help their businesses soar over their competition. The seminar was presented by Chad & Donna Bordeaux of Bordeaux & Bordeaux, CPAs, PA to the Belmont Chamber of Commerce.

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Page 1: Surviving An Economic Downturn

Surviving an Economic Downturn

Strategies to Improve the Financial Life of your Company

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Page 2: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

www.yourcpapartners.com

Chad Bordeaux, CPA, CFE and Donna Bordeaux, CPA, PFS548 Nautical Drive #202

Lake Wylie SC 29710

Page 3: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

What problems are you currently seeing in your businesses?

Page 4: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Evaluating the Problem and Finding Solutions

Page 5: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Cash flow is the first factor that can “sink a business”

Page 6: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Planning with Budgets and Forecasting

Use budgets to review your expenditures

Use forecasts to look to see where you have the possibility of going

Planning draws the map from here to there

Benchmark your company against the industry averages

Page 7: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Evaluate all expenses by reviewing your Income Statement each month.

Review the services to see which ones are no longer needed, and research prices and offerings from different vendors to see if there are cost-effective alternatives.

Research prices through the web. Are there better alternatives?

Page 8: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Examples of operating costs◦Cost of goods or services sold◦Facilities (rent, cost of ownership)◦Payroll (including benefits, bonuses, etc)◦Contract labor◦Marketing and advertising◦Loan repayments◦Taxes (income, personal property,

sales/use, payroll)◦Insurance

Page 9: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Pick 2!Remember when comparing anything your business buys, you can’t have all three. You pick 2 and the vendor decides the third.

Make sure that cutting costs does not lower the quality of your product or services.

Quality

Price

Service

Page 10: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

The Silent, Deadly Killer in the Business

Inventory

Page 11: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Inventory Management◦Control ordering function and take physical

counts◦Look at what sells and analyze re-order points◦Negotiate when trying new products◦Look at inventory turnover rate for your

industry ◦Get rid of slow moving inventory◦Require pre-payment for all specialty items◦Watch for restocking fees

Managing your cash flow

Page 12: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Receivables must be monitored closely!

Receivables can be an indicator of how hard your customers are being hit by an economic downturn, and could provide an early warning that clients are about to cut back on their purchasing.

Page 13: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Growing pains

When sales increase dramatically, watch out for cash flow problems◦Terms◦Factoring

Page 14: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Options when you need more cash◦Borrowing – from bank, family,

shareholders Use the right bank for your

business!

◦Additional Capital investment by owners

◦ONLY A SHORT-TERM SOLUTION

Page 15: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Managing your cash flow

Is using a credit card a good option for your business?◦Keep credit in your business

name whenever possible.◦Get credit established when you

DON’T need it.

Use discipline!

Page 16: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Revenue Saves the Day

“… this man did not spend a dime if nine cents would do, but the great lesson he was teaching me was that you make money by creating sales, not by pinching

pennies.” - Ken Blanchard & Sheldon Bowles

Big Bucks!

Page 17: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Revenue Saves the Day

Look at what you sell and how you sell it◦Does the “new economy” provide different uses

for your product or service?Don’t fall into the media trap – you are not

a victim and the economy provides new opportunities if you will look at them.

Consider purchasing your competition or complimentary business

Expand services or Re-Invent

Page 18: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Revenue Saves the Day

Look at your sales and marketing◦Passive Marketing◦Aggressive Marketing

How much does it cost to get a customer?

Enlist the help of a professional to learn how to sell or have someone sell for you.

Page 19: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Revenue Saves the Day

Learn more about your competition◦Industry organizations◦Networking◦Have lunch with your competition◦Check out their websites for pricing, service,

and sales ideas

Page 20: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

“Small Business Owners spend too much time working in their business and not enough time working on their business.”

- Michael Gerber,The E-Myth

Page 21: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

Why did you go into business?Has your business changed directions

since it started?What has your experience been?What did you expect? Have these

expectations changed?

Page 22: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

A•Accounting•Bookkeeping•Taxes•Payroll

T•Thing they do best

M•Management•Marketing

Page 23: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

85% out of business

15% survive

Which group will you be a part of?

Page 24: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

What can you do to improve your odds?It is tougher now than ever for small

businessesLarger businesses operate differently and

have better information for decision making

You need better information for decision making

Page 25: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

If you work on your business, how do you know if it was a successful move unless you monitor your progress?

Bookkeeping and reports can create the X-ray but use your accountant to help read the x-ray. They can help you diagnose and put a treatment plan in place for your business.

Page 26: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

What you need to measure your businessPrompt and thoughtful answers

to your business questionsMonthly financial statements

(balance sheet, income statement, sales analysis) with feedback and key performance indicators

Reconciliation of your bank accounts

Analysis of your business compared to your industry peers

Page 27: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

What you need to measure your business (continued)Ideas for growing your businessProactive tax planning and

preparation to save you taxesAccurate, easy and integrated

payroll processingRequired reports: payroll, sales

tax, property taxes, income taxes, estimated payments

Prompt resolution of any tax notices

Page 28: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

If you do not have this information, you are working with one arm tied behind your back.

Consider your strengths and weaknesses Do what you do best and outsource the

rest.Surround yourself with people who know

the answers.

Page 29: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

Measure what you treasure

Don’t get stuck in the day-to-day activities so that you don’t have time to implement any new ideas

Step back and look at your business from the outside to objectively see what needs to be improved to help it grow

Free yourself up to implement those new strategies

Page 30: Surviving An Economic Downturn

Copyright © 2008, by Bordeaux & Bordeaux, CPAs, PA

www.yourcpapartners.com

Chad Bordeaux, CPA, CFE and Donna Bordeaux, CPA, PFS548 Nautical Drive #202

Lake Wylie SC 29710

We are here to help!