The last post focused on the opportunities that have arisen from the dust of the economic downturn. Today, we’ll focus on how to seize those opportunities and fund growth.
In the wake of economic uncertainty, it’s a new world, with opportunities for substantial growth – for those who seize the day. Now is the time to closely examine your
Here are some tips for building liquidity from operations:
- Conduct market pricing analysis
- Analyze direct cost and G&A expenses vs. competitors
- Maximize use of term loan against non-current assets or assets outside the company
- Minimize short-term lending
- Restructure debt to lower payments through a longer term
- Refinance with a different institution
- Replace debt with equity financing
- Focus on processes that comprise a cash-to-cash conversion cycle
- Drive a sense of urgency to turn over every balance sheet dollar faster and increase working capital velocity
- Keep your SG&A as variable as possible and your capital plan as flexible as possible.
- Consider changes to your capital structure, including recapitalization
- Consider a divestiture. Just because a product line survived the downturn doesn’t mean you should keep it. Divesting it could make sense, rather than spending time to fix it.
Keep in mind, most key processes cross over different business silos. For example, customer terms affect areas such as credit, sales, manufacturing and service. Look for the areas where you can get the most “bang for your buck.” Remember, the goal is to translate these operating improvements into improved liquidity.
