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What business strategies should your borrowers pursue in the recovery?

As you assess the loan requests from your business borrower’s to gear up for the recovery, a conversation about their strategies will help you decide if they have a good plan. Economist Bill Conerly PhD shares some great insight on how business can do well in an upswing.

I had dinner with Bill (my favorite economist) this week. When he says things are looking up, I believe him. Of course it helped that he agrees with me, too. Business lending will be tougher in the recovery as the pre-recession years are dropping off the historical radar and the worst years of the recession are coming into our lending calculations.

I like Bill’s ‘Conerly on the Economy’ monthly newsletter with easy to
understand graphs and his comments scribbled on the side. If you want a
quick picture each month so you can talk business with your borrowers, this is a great one. (Sign up here if you want your own copy.)

These were some of his August charts. Click on the image below to enlarge it.

BusinomicsAug2009.JPG

Click through to the full August 2009 newsletter for other graphs including more detail on Oregon and Washington.

Here is September 2009! The RECOVERY is officially in progress. Click on the image to enlarge.

BusinomicsSep2009.JPGClick through to the full September 2009 newsletter for other graphs including more detail on Oregon and Washington.

Okay, Bill, I am convinced. So what should business do next?

Read Bill’s take on your business borrower’s best strategies in the recovery. He gives specific advice on:

  • Revving up the sales force
  • Cost-saving ways to bump up inventories and replace equipment
  • Focusing on core business if resources are limited or your bank is still restricting credit
  • If possible, look to peripheral opportunities
  • Lock in lower rents
  • Buy a competitor
  • Hiring strategies to rebuild the workforce

Bill finishes with this:
The
turnaround in the economy offers the potential for savvy companies to grow
market share while lowering costs.  It’s
not time for business as usual.”

I agree. Read the full post in his Businomics Blog and then do your business borrowers (and yourself) a favor. Send them an email with a link to the post.

What other suggestions do you have for businesses to do well in the recovery?

About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.