Facing the business challenges of an economic downturn

1. Thriving in Troubled Times
Martin Fox, CPA, CVA

2. Overview
 Things have changed
 Not all will survive
 Financial and business fundamentals
will greatly improve odds
 Tools to help
 Hands-on activities

3. Be Cautious
 Think long and
hard
 Lenders less
willing to loan
money
 Customers less
willing to spend

4. Have a Plan

5. Financial Fundamentals

6. Know your business

7. Break-even Analysis
 Why is it important?
 Used to answer questions such as:
– How much do I need to sell to break even?
– How far can sales drop before I lose money?
– If my costs change, how much do I have to
increase sales?

8. Breakeven Analysis
 Breakeven analysis
 Breakeven + profit analysis
 Consider changes in activity and
fixed costs
 Case study

9. Breakeven Case Study
Sales $2,000,000
Variable expenses $1,500,000
Fixed expenses $600,000
Desired profit $100,000

10. What’s the Effect of Raising
or Lowering Prices?
 Price Decreases
 Price Increases
 What if our
sample business
changed prices
by 10%?

11. Monitor and manage
your cash flow

12. Manage
Customer
Credit

13. Aggressively
manage
working
capital

14. Optimize
your
financial
structure

15. Current Business

16. Reduce
costs and
increase
efficiency

17. Aggressively
manage the
top line

18. Rethink
your
product
mix and
pricing
strategies

19. Rein in planned investments
and sell assets
Rein in planned
investments and sell assets

20. Calm
employees'
fears

21. Seize Opportunities
Invest for the future
Pursue acquisition opportunities

22. Implementation

23. Tools
 Breakeven Analysis
 Pricing Tables
 How to Improve Profit
 Four Ways to Grow Your Business

24. Contact information
Martin Fox, CPA, CVA
200 W. Roseburg Ave.
Modesto, CA 95350
(209) 527-4220
mfox@gccpas.net