These are scary times, but you need to keep informed – and maintain some crucial relationships.
If you aren’t absolutely glued to every financial commentator on the TV and reading SmartCompany or Business Spectator, or The Australian Financial Review at the very least, then you may just find yourself in hot water. The financial markets are in turmoil and this will have an impact on your capacity to get funding for your company.
And I’m not just talking about equity funding. I’m talking about your loans and your overdraft.
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This is the most serious financial crisis for decades. On Tuesday night, for the very first time, an American commentator mentioned the word “depression”. He wasn’t suggesting that America was heading for depression, but he was drawing a comparison between what’s happening now and what happened in the Great Depression.
Now is the time to make sure that your financial base is stable and that you have in place access to as much debt as you can manage. You don’t need to draw down the debt, but have some facility in place just in case.
George Soros commented a few nights ago that the financial markets will take a couple of years to recover. And he thought that was an optimistic view. Don’t try to wait out the storm. It may be a very long time. If you don’t have enough cash to operate then you will be out of business. It is that simple. Do whatever you can now to gain access to funds.
In these times make sure that you look after your bank manager. That person may well hold the keys to your future. If this downturn is a protracted one, as many are suggesting, then it is going to be a long slow ride. You will need your banker on your side.
Here are a few tips to keep in good with your bank manager:
- Keep in touch regularly. Contact him every three months or so and update him on your progress.
- If something nasty happens then tell your bank manager. Let him know what’s happening.
- Meet all your payments as they fall due. Now is not the time to be sloppy. Give your bank repayments a high priority if cash is short. At the end of the day it is your bank that will (change that to “may”) help you in a cash crunch.
- Know what’s happening in the financial markets. Your bank manager will feel more confident that you know and understand what’s happening. You want your bank manager feeling confident that you are in control and will be able to manage in tough times.
- Review your debts/overdraft to see if there are better options where you might save interest or can increase the flexibility of your finances. Having in place flexible arrangements in these times will give you the ability to move quickly. That could be very important in the coming months.
Keep a close eye on the financial news. Get as much information as you can – the markets are changing very rapidly. Then you’ll be in a much better position to cope with these tough times.
Till next week…
Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site www.pitchingtoinvestors.com with tools and tips about how to develop killer presentations to raise capital.
To read more Gail Geronimos blogs, click here.