Armanino Blog
Article

Lessons From Last Recession Can Help Businesses Today

by Bryan Graiff
August 31, 2020

Note: This article was originally published on March 25, 2020 and updated on August 31, 2020.

The last recession took over 18 months to develop and caused bankruptcies for the following five years. During that time, our experts have been where many of you are today, leading companies through a crisis. As the world faces an impending recession caused by the COVID-19 pandemic, every business and organization must manage through our current challenging environment. Some will go bankrupt, while others have the potential to come out on the other side stronger.

In our experience leading companies through bankruptcy, here are the lessons we’ve learned:

  • Cash flow management and communicating with your lender is critical. The government is putting in place disaster relief loans for which your company may be eligible. More legislation is on the horizon.
  • Crisis communications is even more important. Setting the proper tone at the top and providing a calming hope to your employees is critical.
  • Communicating empathy while trying to manage customer payments is very important. Communicating with and managing your vendors to keep operating is also vital.
  • Many companies don’t have reasonable cash flow forecasting models to use to ensure they are getting results. Your vendors and banks may require this to grant more credit or expand borrowing capacity.
  • Making tough decisions on operational and labor cuts are extremely difficult.
  • Organizations that applied for and received Paycheck Protection Program (PPP) loans experienced some relief but will now have to apply for loan forgiveness.

These lessons are just the tip of the iceberg when it comes to managing a company during distressed times. For assistance, contact our experts.

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