A Tough Road Ahead
It is a nice sunny November day here in Montrose Colorado as I reflect on today’s economic climate. I read that 159,000 jobs were lost in September and another 240,000 in October. At best, things look pretty bleak. In light of all this the American Institute of CPAs, of which I am a member, offered financial advice to people caught in the job loss crunch. It was stark chilling advice of reality. Conserve cash as best you can given the situation. Expect tough times to last longer, create a budget, and carefully assess your financial situation.
This is also good advice for businesses because they are facing rapid and severe changes in their business environment that most have never experienced. My parents and grandparents came out of the depression and were frugal. In my life time, I can’t remember anything like this and I have endured some crises of major proportions. Businesses look to me for advice and I have to tell them that cash is king.
The best advice I can deliver is to have a plan, develop a budget, and be ready to react fast. Take a look at your resources and see what can be converted into cash. The more cash resources you have available the better. Another step is to lock in some type of credit line to cover the “just in case” situations. It is going to be tougher to get and more expensive. But do what you need to do.
Don’t panic because you won’t think clearly and this is when you need a well thought through plan of action. Good planning can uncover opportunities rather than just keep going down the same old road. That road may be a dead end. A focused strategy and an action oriented implementation plan is what most businesses need in light of the current situation. Things aren’t the same and probably never will be. Now is the time to redirect your business in a new direction.
CPAs need to advise clients to realize that things are different now. This is a time when CPAs need to give good advice and shift their focus from preparing financial statements and tax returns to helping clients plan for the future. If they don’t do this they may not have client tax returns to prepare down the road.
My job is to help CPAs and business owners deal with the future and in this economic environment, unfortunately the future is now.