Preparing Your Business for the Recovery - Financial Post

[Comment From Warren]
Yes the economy is turning. Growth should pick up during the fall and winter as consumers return to the malls, retailers begin restocking shelves and those shovel ready government projects actually begin to get shovels in the ground.

[Comment From Warren]
The good news in the second half of the year will be less bad news…in other words, the problems that exist in export markets, the job losses we are experiencing across the country and the problems in the auto sector won’t go away over night. Growth will resume, but it will very uneven. The best advice is to prepare for a fairly long recuperative period and make decisions under the assumption that 2010 will be a year of recovery

[Comment From david simpson]
entrepreneurs can never breat easy- if it were easy, anyone could do it. Good entrepreneurs are always looking at improvements, and this recession gives enough “pause” to reflect a bit on your business strategy

[Comment From David Wilton]
Business plans are key to managing the various aspects of a business because they help you focus on the factors which will drive success. With a written plan in place, including financial projections a business owner can test different possible strategies being considered. Changing economic environments call for fine tuning a business plan to reflect the change in revenues, costs, product mix etc. It’s part of adapting and staying nimble. A key attribute of small businesses.

[Comment From Josephine Maxwell]
Warren Jestin, What will the recovery look like? I’ve heard talk about a Square-Root Sign shaped recovery? What does that mean, and what are the implications for a small business person.

[Comment From Warren]
I’m not a big fan of the recovery alphabet and related signs. Look for a fairly strong rebound during the late fall as inventory rebuilding and infrastructural projects get underway, but the follow-through next spring and summer may be disappointing because the U.S. market, which takes 75% of our exports, is in full a very lengthy convalescence. My best guess is that we will see renewed strength in consumer spending, housing will bounce off the bottom and Western Canada will once again receive a cash infusion from higher commodity markets. Manufacturing production will remain soft as many producers—particularly in the auto sector—restructure and downsize.

[Comment From Christine]
Hi. Who can I go to for financial advice within my biz plan? I excel at marketing, PR, branding, even strategic operations. The one thing I don’t excel at or am even afraid of, is the financials. Accountant? Financial planner? Thanks.

[Comment From david simpson]
One thing I might suggest Christine is that every good entrepreneur knows their weeknesses and you pointed out lack of financials. Your accountant can help prepare, but i would also look to add a mentor- a seasoned entrepreneur with those skills to your advisory board. most successful entrepreneurs love to give back by assisting new entrepreneurs

[Comment From Connie Mendleson]
Hi Warren Jestin, For businesses that have cut prices to keep customers, when will they be able to revert back to normal price levels? Or is the sort-of “jobless” or flatline recovery we might be in for such that business might just have to get used to living with those lower prices?

[Comment From David Wilton]
Great question!! It’s really important to find advisers you can trust. Talk to your local small business banker, a great resource who can help and/or direct to you to local accountants or educational resources in your community. Scotiabank also has some on-line e-learning courses available to customers that can help.

[Comment From Warren]
Competition will remain intense, particularly if the recovery is lethargic. This is particularly the case for exporters, many of whom have been under enormous pressure in the U.S. market. An added problem is likely to be a rising Canadian dollar, which is good news for importers of U.S. dollar priced goods—helping margins—but bad news for exporters. Consumer goods from abroad will also be more competitive at the retail level, so the bottom line is that margins will remain under pressure and pricing power will be very limited.

[Comment From Maria Kanellos]
Want to open up a restaurant. Good time? Bad time? Also have been toiling with my business plan for 6 months now but can’t seem to get it into action. Would you have any advice on any tips to get moving and un-stuck? Are there coaches out there that help you put your business plan into action?

[Comment From David Wilton]
Thanks Maria… moving from an idea to a real business is a big step. There are some good business coaches available. Your local Scotiabank Small Business advise may have some local suggestions, or do an on-line search to find businesses that do coaching and mentoring. Also, local business associations or other business owners that may be willing to act as mentors may be helpful.

[Comment From Hugh Elliot]
For David Wilton. If a business owner can plan for seasonality, is it possible for a business owner to plan for cyclicality? For example, big mining business can (or are supposed) account for cycles that stretch over, say, 5 to 10 years. Is that something even a small business owner should keep in mind?

[Comment From david simpson]
Always a good time to open a business, though restaurant statistics will scare you. I opened one in the recession (and gst introduction) of 1990. The lessons we learned during the “lean” start up times were invaluable- and we never got fat. The business is still going. Your best feedback is to speak with your target customer, get their thoughts on concept. Friends and family are your only funders for this kind of start up, so get their real opinions early

[Comment From Ellen Meldrum]
David Wilton, I think we should emphasize a point. Our chat is premised on small business owners getting ready for a change in business conditions. Generally speaking, entrepreneurs should be thinking about change every day, shouldn’t they? Be it change for the better or the worse, working through “what-if” scenarios have to be a regular event for business owners, right? No plan is perfect.

[Comment From david simpson]
Absolutely, a biz plan describes what “won’t happen” as business evolves. What is important is the assumptions in your plan, your real results cause you to think through those original assumptions and adjust. Everyone says entrepreneurs need to be passionate about their product. That may be true, but I prefer to have passionate customers. Be prepared to change your plans towards those customers as the times dictate

[Comment From David Wilton]
Having a business plan that lets you model both seasonal or business cycle changes is a great place to start. Have a plan A, B or even C to cover both the ups and downs that are reality for all businesses helps you devise specific tactics to deal with challenges and take advantage of opportunities. It’s important for both big business and small business. The advantage for small business is it is usually easier to adapt in smaller enterprises.

[Comment From Warren]
Three decades of trying to predict the economy has taught me that you will never completely pick turning points…all business cycles have a unique footprint, so trying to plan business activity in anticipation of cycle turns would be extraordinarily difficult, to say the least. Stick to the same formula for running a business in good times and bad. Stay close to your customers and market trends, retain balance sheet strength and don’t be overly optimistic when drawing up your profit plan.

[Comment From david simpson]
Capital is the fuel for small business and the companies that endure recessions usually have good balance sheets. Generally speakin, entrepreneurs are “always” raising money and should keep up to date financials and biz plans ready for any financing option. Low rates are a good time to re-capitalize the debt side- but only if compatible with a growth objective. A second plus, asking your bank for money in a recession will tell you a lot about what your bank thinks about your prospects “post recession”

[Comment From Jonathan Wright]
Tips for the small business owner to stay organized? Any techniques that have worked for these experts, please share.

[Comment From David Wilton]
A common challenge for small business owners. You wear many hats including chief financial officer, human resources manager, bookkeeper and so on. It’s hard to keep it all organized. The small business owners we feature in our book Get Growing for business - Keys to Unlocking the potential in your business, point out you need to recognize you have to focus on saying no to lower potential activities (you can’t run after every opportunity) find people who can do things for you (hire a good bookkeeper, get a student to build your web site) and finally make sure you have clear goals that help keep you focused on doing the important things, and forgetting the rest. When all else fails…. sticky notes are great for creating to-do boards!!

[Comment From david simpson]
We all have a “to do” list. Small business owners need a weekly significant to do list. Calls to make, supplier to chat with- real events that impact your business each week. Like your business plan, you won’t get to them all, but it helps check your progress weekly against objectives- and eliminates wasted time

[Comment From Peter Hofsteader]
David - I thyink we are pulling you away from the goal of this chat but we appreciate Warren….

[Comment From David Wilton]
Drew… finding good employees is a key success factor for businesses. Regional labour markets are different, but on the whole you’re right, higher unemployment rates mean there are more people available when you need staff. The real issue is getting good quality people. Highly skilled employees are always in short supply so using effective hiring practices, making your business a great place to work, and keeping your eye out for high caliber people is always are always important for small business owners.

[Comment From Warren]
Big job losses have translated into hiring opportunities for those businesses that are expanding. In many cases, however, the market for skilled labour remains pretty tight. The market will also tighten up pretty quickly beyond 2010 as baby boomers retire and fewer younger people are coming into the labour force. The most important thing governments can do over the next half decade is to improve Canada’s educational infrastructure to ensure that are labour force is globally competitive. And the best place to start is not at the top, but at the primary and secondary level. Skills training and transitioning recent immigrants into the labour force is also an area we should be investing in to a much larger degree.

[Comment From david simpson]
Skills development is important, but also encouraging entrepreneurship. With our HBA and MBA students, this most recent recession has demonstrated the power of an entrepreneurial lifestyle in that jobs they thought they were applying for vanished overnight. We need to train, promote, celebrate and encourage Canadian entrepreneurs

[Comment From david simpson]
Supplier relations are the cornerstone of longevity. Great family businesses always understand that one needs win/win relations to succeed over the long haul. Taking advantage of low prices is important, but taking an understanding of your supplier is even more important (is their business viable at that price). Keep the long term in mind when negotiating- as you will need to help as often as you are helped

[Comment From David Wilton]
Drew.. the ability to give your sales force price flexibility will be different for each business, depending on profit margins, competitive pressure etc. Consider the implications of this type of strategy by using the business plan to model the bottom line affect of reduced margins. It’s a balancing act between responding to your customers desire for reduced cost and your need for profit.