Preparing Your Company for the Recovery, Part 2

May 2010

Preparing Your Company for Economic Recovery, Part 2

With the economy showing signs of recovery, now is the time to position your company to reap the benefits of improved conditions

• See Part 1, published in the August 2009 issue of the Bottom Line

Former Federal Reserve Chairman Alan Greenspan recently stated that America’s severe economic recession has “bottomed out,” but he warned that the recovery will be “slow” and “trudging.”

Although the comments of Greenspan and other economists are cautious, those comments nonetheless generally represent welcome news for struggling business owners who are waiting for a return to prosperity. With the economy showing signs of recovery, now is the time to position your company to reap the benefits of improved conditions.

Here are five questions aimed at helping you assess your readiness to take advantage of upcoming opportunities.

1. Have your customers’ “wants and needs” changed? Depending on the type of products or services you provide, your customers’ expectations may have changed during the recession.

For example, a number of restaurants changed their menus to accommodate cash-strapped diners and lunch-time customers who no longer have expense accounts. In order to attract business, they’ve added lower-priced options and started running coupons and offering other specials. Once the recovery is in full swing, will diners continue their belt-tightening ways?

You might consider taking a survey to determine if your customers’ requirements have been altered by the recession and, consequently, to learn the extent to which you need to change to meet and exceed their future expectations.

Here are some examples of questions that can illustrate how customers view a business and identify opportunities:

“Overall, how satisfied are you with our company?”
“Would you purchase from us again and recommend us to others?”
“On a scale of 1-10, how would you rate our customer service?”
“Which of our products and services do you plan to purchase in the near future?”
“Are there any products or services we don’t provide that you would like us to begin offering?”

2. Are your employees, as well as the leadership team, ready for the recovery? During the recession, company leaders most likely spent considerable time and effort dealing with difficult problems. To make matters worse, many organizations were forced to downsize. As a result, overall morale may be low.

ow is the time to communicate goals and expectations with employees at all levels. Focus specifically on what the company is doing to thrive in the coming months and years. Frequent, upbeat communication can help motivate employees and direct them to focus on the future and not linger on the past.

3. Do you know where to invest newly available capital? As sources of credit become available or your company’s profit picture improves, it’s important to have a process in place to quickly determine where to invest capital resources to support long-term growth. Consider developing a list of critical projects – in order of importance – that will contribute to long-term profitability. If a formal approval process for capital projects does not already exist, now is a good time to create such a process.

4. Does your existing technology meet your needs? During the recession, many companies deferred or canceled investment and maintenance of their technology infrastructure. As the economy improves and business picks up, that lack of investment can become painfully apparent, especially if your competitors have chosen not to forgo investing in technology.

Coordination is a key factor when planning ahead, especially if a company’s IT budget contains only modest increases. Ensure that technology investments made throughout the company complement each other and support the quick, efficient exchange of data throughout the organization.

5. Do you have a plan to hire, motivate and retain employees? As the economy improves, the demand for talent will increase. Consider conducting a “talent inventory” that identifies which employees must be kept and which employees you would be comfortable losing. This exercise can also help you determine where new employees are needed.

Businesses should develop clearly defined requirements regarding the type of employees that they wish to hire and the wages that are needed to attract them. Taking the time now will dramatically reduce the probability of hiring the wrong individuals later.

Conclusion. It is no secret that thriving during an economic recovery is much easier than surviving during a recession. But no matter what is happening with the economy, it’s important to have a plan. Honestly answering the questions posed above can be a significant help in preparing for the returning good times.

Based in Mesa, Arizona, and serving closely held businesses in the East Valley, the Phoenix area and throughout Arizona, Schmidt Westergard & Company, PLLC, is an independent full-service tax, audit, accounting and business advisory firm focusing on the middle market.