Morale, Mission, and Cash Flow – Can All Survive In a Down Market?

Co-authored by Ilona Davis

Economic conditions are cyclical; there are times of abundant wealth and times of vanishing cash flows. Times of abundant wealth bring along what some would consider “champagne problems,” still problems, but ones we would rather manage than the potential contrary. Then comes the middle ground, a place where hopes of better times intersect with calculated frugalness. This healthy balance often puts people in a position of calculated behavior to avoid risk, while actively pursuing greener pastures. The third stage in our broadly painted cycle is a down market, a time where the strong survive, and many (businesses) don’t. It is in these times of difficulty that a business’ ability to manage its mission, employee morale and ultimately cash flow in order to survive is challenged. Below we will explore each part of Morale, Mission, and Cash Flow in order to identify at least one or two positive ways a business can behave during these difficult times.

Let’s begin with the obvious, cash flow. A business that can’t generate cash flow has an identifiable end point. Consider adjusting your product offering and customizing it in a way that would generate revenue; any temporary revenue is revenue that may keep the business running. Consider the following ideas:

  • Sell discounted future services: this option is basically borrowing money from your customers to be paid at a later date as product/services. The nice thing about this option is that it provides a buying opportunity for your client, ensures future business and access to the client, and provides the business with immediate working capital. This isn’t a perfect solution as it does cut into future earnings, assuming those same services would be sold at full price, but remember, only a surviving business has the luxury of worrying about lost revenue.
  • If costs must be cut, consider optional unpaid time off for employees based on choice. Allow for trading so that the employees can support each other and take time/work as needed while saving jobs.

A company’s mission is the x-factor that goes beyond its ability to generate positive cash flow in order to financially survive, and ideally thrive. A company that deviates from its mission during a downturn may never regain it, at least not in the eyes of its customers and employees.

  • “Stay true to what got you here.” When we are stressed we allow our emotions to control our thoughts; our reactions become more about emotions and stress, and less about sound decision making. Be conscious of that and avoid it. Companies should remember to treat their customers with respect and provide the level of service/product they are accustomed to. A down economy is not the time to compromise quality nor values.

No company can survive without the people who make it. A labor force is the one essential business element in any business. Remember, employees are human and have their own worries and concerns, they are not immune to the stress reaction and thought pattern mentioned above. Trust is built and broken under stress; if a business is able to support and provide for its people in time of stress, they will be more likely to support and provide for the business in times of opportunity.

  • Show your people they matter most: employees that feel cared about will work harder and stay longer.
    • Consider putting together care packages (either donated to employees or purchased by employees at a discount). At times of shortage, sourcing groceries in bulk from local producers and packaging into employee packages may help support the local economy as well as the well-being of employees.
    • Avoid layoffs. As discussed above in cash flow, there are ways to avoid layoffs. Put your employees first and they will do the same.
    • Put yourself in their shoes: What will make their lives easier as they too work to weather the storm?

Businesses can survive economic downturns, but they often can’t survive an unmotivated workforce, or an unresponsive clientele. As a business owner and/or manager, you have the ability to think outside the box and create a reputation built around the people who drive the cash flow necessary for success. It is the people who feel supported who will work harder and stay with a business, and it is the clients who feel valued and cherished who will continue to spend their money. We can’t control the market or when it will turn, but we can control our behaviors and the way we face adversity.

For more information, please contact your BNN advisor at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

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