Facing an economic downturn, how can you adapt your budget to ensure cash flow?

Managing your cash flow is absolutely critical to surviving a downturn. This means your accounting records should be kept up to date, so that meaningful analysis is available on a timely basis. Ask your Accountant to help if this is too difficult for you or too much of a distraction.

Primeiramente se deve considerar a importância de manter o registro de todas as operações financeiras e uma contabilidade em dia. A partir dos dados passados, e previsão futuras, o planejamento orçamentário deve ser construído, e sempre que necessário contar com a ajuda de profissionais experientes na área. Manter a liquidez e saber o momento onde ocorre a sazonalidade dos negócios ajuda a evitar perdas significativas, e amenizar os riscos.

Do not wait for one revenue stream to decline before considering a new one. Building a new revenue stream will take time, so prepare even before any decline.

Não é necessário reinventar a roda, apenas saber observar o mercado e seus clientes. Um exemplo clássico que a pandemia trouxe foi a migração das lojas e pontos de atendimento físicos para o delivery e ecommerce. Assim, basta saber o nicho de mercado que se encontra e o que pretende alcançar, traçar uma boa estratégia e periodicamente revisar, e realizando adequação se necessário.

Successful cost reduction exercises always start with a REALISTIC target. Avoid the temptation to set a cost reduction target which is unachievable as it will waste a lot of time and will demotivate teams when they fail.

Quality of output is a very important point when considering cost reduction. A shift from an expensive raw materials to a cheaper one will surely affect quality. If there are other items to still produce a cheap, safe and quality product/services without cutting corners ~ such should be considered. There are usually several products with slight differences in grades of quality. The aim in cost reduction still remains the same ~ churn out as best quality of a product as you can without compromising your own standards as well as industry standards. You do not want to focus highly on the revenue coming in as a result of reduced costs because it will cloud your judgement and bring about ideas to cut corners instead of costs.

Avoid using long term capital sources to fund short term expenses. Make sure you know how to manage working capital requirements which tend to be short term in nature.

Matching your goals with the appropriate debts will save a lot. We have often seen companies using long term debts to cover short term objectives and vice versa. This will put a lot of pressure on the little resources available at the company's disposal. Also, in paying off debts faster, focus more on the capital borrowed. Split it as much as you can and put something extra towards your principal. Refinancing is also another option to lower your monthly payments ( You need to do the calculations IF it is worth it to refinance). Use the appropriate type of debt to match the objectives of your financing needs.

A downturn can be an opportune time to make strategic investments. With a well-planned budget, allocate funds to high-return projects or assets that will pay off when the economy recovers. 📉➡️📈 Consider investing in technology to improve efficiency or in training programs to enhance your team's skills. 💻📚 Be selective and focus on investments that align with your long-term business goals. Opportunities often arise at lower costs during tough times, allowing you to gain a competitive edge when the market rebounds. Strategic investments made during downturns can set the stage for significant growth and innovation, preparing your company for future success. 🌟

Maintaining liquidity reserves is essential to withstand an economic recession. Ensure you have enough liquid assets, such as cash or easily marketable securities, to cover several months of operating expenses. This financial cushion provides flexibility to handle unexpected costs and ensures you can continue operating despite reduced revenue.

Maintaining liquidity reserves is essential to withstand an economic recession. Ensure you have enough liquid assets, such as cash or easily marketable securities, to cover several months of operating expenses. This financial cushion provides flexibility to handle unexpected costs and ensures you can continue operating despite reduced revenue.

Créer des cautions bancaires sous formes des liquidités à courte durée ou à moyen terme sous forme des comptes d'épargnes ou des comptes auxiliaires