Home > What's New > Schedule of Events  > Press Releases

Maintaining business value is key in downtimes
By Robert Cera
Guest Columnist – Finance
The Business News

August 17, 2009 - While there is some news and hope that the recession is easing, and we should maintain an attitude of optimism, we also need to balance it with a sense of realism. Back in early 2008, I was predicting a recession when others were forecasting smooth sailing; similarly, while others are predicting improvements by the end of 2009, I’d like to caution that a 12 to 18 month timeline is more likely for economic recovery.

Businesses that have made it thus far through recent market turmoil have decent odds of making it through to see better times, but what can be done to ensure continued success, and readiness for the eventual rebound?

The starting point should always be a strategic review or plan. What are your goals? Is it important for you to grow the business or is maintaining status quo satisfactory? What is the minimum level of performance you must achieve, from a worst-case scenario perspective? Utilizing a realistic approach is critical as you make decisions and predictions specific to your business, so charting and analyzing processes may be a useful exercise to help you walk through details. Then, keep reviewing your goals and projections to make adjustments as needed.

You’ve probably heard of the “5 C’s” of lending – capacity, capital, collateral, credit, and character – but I’m going to highlight “5 C’s” that are key to business in today’s marketplace: customers, competition, current conditions, credit, and confidence.

Taking good care of customers is important in any economy, and in a rough economy it’s even more crucial. Ironically, it can also be a time when it is more difficult to do so, as a result of limited budgets and resources. This creates an interesting challenge, but it can be managed with a careful balance between business development and expense minimization. A common strategy is to focus 80% of your resources on the top 20% of your customer base, which can create the bulk of your profitability.

As for competition, a down market can eliminate some of your competitors by default, but for others, it creates a “bunker” mentality where they retract business development and marketing efforts. This creates a prime opportunity for your business to stand out from the competition and attain new business. By first determining what your competitors are doing, you can begin to gauge the advantages your company has to offer within the marketplace.

Current conditions can change quickly in a tumultuous economy, and strategy needs to be consistently monitored so it can be fine-tuned. Larger companies tend to cut staff more quickly than smaller ones during recessionary times, but then find themselves short-staffed and with their service suffering, leaving a narrow window of opportunity for local business to step in and fill the need. And while consumers are looking for ways to save at every turn, a beautiful summer weekend can bring out travelers and shoppers in droves, and you need to have your best foot forward so that when they do spend their hard-earned cash, it’s with your business. Additionally, you should continually monitor the tax environment, and how changes may impact your bottom line.

The world of credit is essential to the operations of most businesses. It is important to ensure that critical payments are made on time to lenders and strategic vendors whenever possible. If that is difficult to accomplish, be sure you are communicating in advance to arrange alternative payments to mitigate potential surprises with your credit providers. Take care to keep your networks strong so that you’ll have the support you need through thick and thin.

Last, and most comprehensive, is confidence – confidence in your customers, the future of the economy, and yourself & your business. Your attitude about all of these things is reflected in your decisions and actions, and will ultimately determine the level of success you achieve. What message are you sending to your customers and employees? Are you demonstrating a positive attitude, and that you believe in their ability to succeed? As a business leader, you can develop a self-fulfilling prophecy where the people you influence achieve the standard you project.

Even though the impact of the stimulus package may not be felt on Main Street as much as we might have hoped in 2009, by focusing on resourcefulness, growth is possible even now. For example, at Baylake Bank we are partnering with a larger company that will allow us to provide expanded wealth services. This asset allocation model will help shift us into a growth mode that will have us well-poised when the economy does take off again.

Likewise, you may want to consider under (or un-) utilized assets within your business units. Do you have a piece of equipment or plot of land for which you aren’t maximizing value? This may be a good year to liquidate it so you can get out from under some debt. Are you tapping into all of the knowledge and skills your employees have to offer? Look for ways to incent them based on the emotional and financial rewards they desire, and you will harness greater potential for success.

Robert Cera is CEO of Baylake Corp. (OTC:BYLK.OB) and CEO of Baylake Bank. Baylake Corp., headquartered in Sturgeon Bay, Wisconsin, is a diversified, one-bank holding company with total assets of $1.1 billion. Baylake has 28 financial centers serving communities in central and northeast Wisconsin.