Contingency Planning | Shah & Associates, P.C. Estate Planning & Business Law Blog
Website Home Contact Us Blog Archives Blog Home

Interesting Image
 
 
 

Would you like more information on:

 
 
 
Schedule a Phone Call
to discuss your planning needs!
Click to Schedule an Appointment







Website Home


Topics



Archives


Contact Information

Forsgate Commons
241 Forsgate Drive
Monroe, NJ 08831
PH: (732)521-WILL (9455)
FX: (732)521-1204
Info@LawEsq.net
www.LawEsq.net






Contingency Planning For Your Business

March 6, 2013

Filed under: Business Planning,Contingency Planning — Neel Shah @ 3:04 pm

As the economy tip-toes back in the right correction, businesses must still be sure to implement contingency plans in the event of another economic recession. As a recent article in Forbes explains, a recession can cause a business not only sales and profits, but time as well.

The first step of contingency planning is to make a list of the major decision-making areas that will be subject to short-run change during any recession. Although all companies are different and will therefore create different lists, some areas that most companies will include are prices and terms, labor, materials and inventory, capital spending, and financing.

The next step in contingency planning is to create plans for each decision-making area for mild, moderate, and extreme economic downturn. In the area of prices and terms, for example, it is often wise to tighten credit terms during a mild recession. Although sales representatives may wish to offer eased credit terms to consumers during harsh economic times, it is important to ensure that your accounts payable do not turn into write-offs.

In a moderate recession, it may be necessary to lay off workers and cancel expensive projects. If the economic situation becomes extreme, your company must enter survival mode. In this final category, it is most important that the company survives. Often, extreme measures are necessary.

The advantage of having three levels of contingency plans in place is that, should there be an economic downturn, you will be able to act quickly to reduce losses.

Enhanced by Zemanta