Businesses can survive and thrive, even in an economic downturn. The need to react by cutting expenses and improving sales, but there are other ways to improve the bottom line during lean times – no matter the size of an enterprise.
Steve Lumley, Principal at MLA Companies is an expert on strategic financial management and building financial legacies that promote business transfers from one generation to the next. His outsourced CFO business has catered to hundreds of small-and-medium-sized, private companies since 1990.
“I’ve seen many firms succeed in lean times by improving systems and procedures,” said Lumley. “Number one is that any business– no matter the size – has to control its balance sheet.”
He offers these five tips to recession-proof any business:
Monitor inventory turns – Identify slow-moving merchandise and focus on ways to turn it over faster. “The key to inventory is turning it over at a good rate at maximal profit margins,” he said. “Super retailers like Walmart are great at this. Be careful what you buy, and invest in fast-moving purchases. A fast-moving item with a slighter lower profit may be a better inventory buy than a higher-profit item that sits in the warehouse for months.”
MAL Companies has a team of CFOs who save businesses up to 80 percent of the cost of a full-time, in-house chief financial officer. A typical MLA client has 10 to 100 employees, with sales up to $50 million per year. Most are in light manufacturing, distribution, wholesale, service, or contracting.
“I saw over the years that a lot of privately-held businesses were not doing a good job managing their financial functions,” Lumley says. “They couldn’t afford a full-time CFO, yet needed that skill set. My company frees up entrepreneurs to do what they do best, which is to promote their businesses and generate new business. This in turn allows the entrepreneur to create new employment opportunities and introduce innovations that enhance the quality of life for all of us.”
Lumley readily admits that his mission is to help businesses survive and thrive.
“I’m most proud of my calling when my clients sleep well at night,” he said.