1. SEIZE THE MOMENT
A classic mistake that CEOs and other senior management figures make is failing to take action early enough. There is a temptation to bury your head in the sand and hope that something will come up. Often, many problems are identified, all of which bear a financial cost, but the company only has enough resources to resolve half of them. Sometimes you have to choose only the most important issues to resolve.

One of the hardest decisions is whether to dispose of a non-core area of the business. It might not get asset value, especially in today’s market, but if you look at the cash impact that it has on the business, it might be worth it. Also, if you defer a decision to sell assets until your financial situation has deteriorated, you might not be able to obtain value anyway.

2. A HELPING HAND
In some circumstances, one of the most useful resources is to get help from someone outside the business, like a non-executive director or chairman. He may not understand that particular industry, but a person with sufficient business acumen and experience can act as a catalyst and bring rigour to some of the managerial decisions.

See also: Can non-executive directors help boost business growth?

A good professional adviser can also fulfil this role, if they know the business well enough. Accountants or solicitors can often act as an invaluable sounding board on a range of business issues. The same goes for consultants, it’s easy to underestimate how much management resources and time it takes to plan and implement projects. If you are bringing someone in, and they are selected well, they will have been through similar situations several times beforehand, which is better than relying on managers with little experience of specific problems.

3. ORGANISATIONAL RE-THINK
In a family business, you often have entrenched roles in the business that no one wants to challenge. The current downturn may be the first time, such a business will have to take a hard look at itself, and sometimes a good shake-up is needed.

On a different note, you may have a business that has operated as a partnership, and avoided the issue of incorporation. It may be a sensible decision for that company, but at the same time, it may be a good time to explore options.

4. WHERE THE MONEY IS
It never ceases to amaze me how many businesses don’t understand where they make money. I can’t stress how important it is to know the extent to which you can afford to provide discounts on a large order, especially in this environment, where it is important to retain as much business as possible. You also need to know the real fixed and variable costs of the company. Basic, I know, but after a review, there are often more non-essential variable costs than previously thought, leaving more scope for further cost-cutting measures.

5. CASH IS KING
The old saying that “cash is king” has never been more true. Management teams should have short-, medium- and long-term cash forecasts readily available in order to be in a position to squeeze working capital.

It is also really important to be as close to your funders as possible. In the past, it was worth looking at the marketplace for alternative financing, but frankly if you have a good relationship with your bank, you’d be well advised to stick with them because lenders are hard to come by. In fact, competition for lending is probably at its lowest level in my working career. Although the base rate has gone down, and LIBOR has dropped, bank fees and margins are higher and margins are more difficult, so the net cost to a business of taking on debt is higher.

6. IT’S GOOD TO TALK
At the best of times, forecasting is difficult, and it’s even harder now.
For example, a housebuilder may reasonably expect to sell units with a 30 per cent reduction in value, but it may be very hard to know how many units he will sell. It is therefore crucial that the stakeholders understand the assumptions you are making about the market, so there are no unwelcome surprises. Even when things are going well, it is important to communicate with stakeholders, especially lenders, about investment plans and overall strategy. Otherwise, it may be that much harder to secure funding and approval for essential investments.

7. CONTINGENCY PLANNING
It’s important to challenge assumptions and always have an alternative plan for every eventuality. I would recommend that anyone with a business should write down different scenarios. On a practical level, rehearse all the difficult conversations you might have with customers, suppliers and employees. These conversations will come up and it is better to be prepared.

8. HIT THOSE TARGETS
It’s all very well identifying problems and forecasting for the future, but
you also need to put in place agreed milestones and make sure they are properly monitored. If these are not actively managed, strategies will drift, which may be costly. It also makes sense because there may be steps in the process that no one can control, and if they aren’t properly thought through, it can all go badly wrong.

9. ADMINISTRATIVE HURDLES
It’s important to have proper terms and conditions in place with customers when it comes to collecting cash. It sounds obvious but I can give you numerous instances where people have failed to invoice the correct name of the business. If you decide to take action to recover debt, and you have the wrong name, or they were trading under a different name, you will struggle to put a case together. You have to make sure you have a firm grip on the administrative processes, and that all the paperwork is in order, so if you want to take action, you’re in a position to do so. Although this doesn’t tend to happen in larger companies, I still see it a lot in family businesses.

10. LOOKING AFTER STAFF
When things are going well, it is tempting to ignore staff issues. However when you’re asking people to work harder, with no increase in pay, and good members of the team have to take the strain for those that aren’t performing, this may lead to tension. Managers have to take tough decisions in relation to staff, while also ensuring they minimise discord by communicating with staff properly.

Tom MacLennan is a director at Tenon Recovery.