Succeeding in Turbulent Times

The credit crisis is just one of several factors influencing Canadian companies today. The Canadian dollar, rising energy costs, pressure from off-shore competitors and the economic slowdown in North America are also contributing to widespread economic uncertainty; creating challenges and opportunities and a need for businesses to focus on value preservation and enhancement.

Liquidity, Cash and Working Capital 

Liquidity, cash and working capital are keys to survival and growth of a business. Businesses need to manage their cash and related assets and liabilities in an efficient and cost effective way, in order to optimize liquidity, improve profitability and respond to market conditions in a timely manner.

Liquidity

For a financially distressed company, cash release or preservation may mean survival. For a non-distressed company, cash release can be used to reduce debt, fund growth and investment or provide a better return to stakeholders.

Reducing Costs While Maintaining Performance

Reducing costs while maintaining performance means helping identify ways of saving costs in some areas of the business and enabling it to operate more cost efficiently.

But wherever costs are reduced, this action must be done in a way that delivers lasting business performance improvements, rather than in a quick hit with short-term gains and long-term difficulties.

Proactive cost management is critical to running an effective organization. Strategic plans need to be driven, tools built to track progress and a cultural commitment must be created to minimize unnecessary costs.

Managing Risk

Managing organizational risk in tough times means taking a holistic view. This requires an integrated cross-departmental framework of controls, checks and balances.

Organizations can no longer afford to treat risk in silos, in separate departmental level initiatives. Risk management needs to be an integrated, enterprise wide approach, keeping focus on multiple key indicators which show early warning signs of potential business problems, with pre-planned strategies to address potential risks.

Ongoing board level attention is required, as risk management is no longer a purely compliance issue. Globally, organizations are facing uncertain times, and management of risk at the highest level is critical. Only with a systematic, but strategically led approach to risk management, can organizations of today be more assured of avoiding, or better managing, the pitfalls of difficult market conditions.

Discussion Questions

1.  Based on your everyday experience, do you see changes in the economy? Do you feel that we are in turbulent times?

2. What must businesses do to stay alive or in business during tough times?

3. Managing Risk! What are some of the risks faced by businesses today?

See KPMG Succeeding in Turbulent Times link for more details