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Letter from the Editor By Jerry Griffin Making the Numbers Work "Informing and Empowering Your Workforce" An idea whose time has come By Gavin Freytag Getting the Money "Managing Your Loan Officer" Advice from a successful lender By Richard Eckels E-Commerce: The Revolution "Changing Business Models in Mid-Stream" An issue you will face By Eric Anderson Exit Strategy "Finding the Best Buyer for Your Company" Leaving successfully By Bob Shortle Reflections "Are You Ready" Are you ready? By Jerry Griffin	Reflections Are You Ready? The United States is enjoying the longest economic boom in its history, but for central Ohio businesses, very real challenges remain. If your company is taking advantage of the "good times," there's still more you can do to position yourself for the inevitable slowdown. And if your company is struggling, I'll give you something to think about that may prove helpful. What's Right About Our Present-Day Economy? First, what's going on in the American economy? Here's what I believe the American economy has been doing right: The Federal Reserve has got monetary policy right, and Congress and the last two administrations have begun to stabilize fiscal policies. Now we have to hope that the Fed will focus on restraining the money supply, not the economy! Ever-widening employee stock ownership is a major trend that is helping to accelerate growth and profitability of American corporations, both public and private. Are you thinking about phantom stock options for your employees? Ten years of improved and accelerated MBA training is now paying off, especially for larger companies. It's those hyped-up MBA's who are making the corporate dinosaurs dance again. Global markets present bigger opportunities, and global competition improves the mettle of the survivors. It just doesn't always feel that way! The huge business appetite for high-tech products and networked communications is driving ever-accelerating growth and profitability. The Internet and the World Wide Web are leading to the biggest business (and maybe social) changes any generation has ever experienced. Information technologies are at last beginning to result in tangible productivity increases. In the long run, on the factory floor and in the office, rising productivity is the sine qua non, the factor that will save Social Security and keep our standard of living rising. And What's Wrong? Ironically, in my opinion, our economy's strength - free-market capitalism - is its weakness. Capital is far more available and mobile than ever before, and the hallmark of a dynamic, capitalistic economy is its excesses. I think that's why our growth is spotty and the fruits unevenly distributed. While markets usually get it right in the long run, the short term is a never-ending series of overshoots, shortfalls, and corrections. Today, for example, we are in the midst of a giant asset bubble, a speculative over-valuation of equities. Unfortunately, when the bubble pops, it may burst the economic balloon as well. In other words, we may not get off as easily as in 1987. How About Your Company? Is your company on the great profitability escalator? Or like many privately-owned, non-high-tech, smaller companies in central Ohio, are you struggling with increased competition, more difficulty in attracting and keeping competent employees, and elusive price increases? Wherever you are on the spectrum, it's important to remember that this great boom will slow down; indeed, it will end—only to start again. When the boom does slow and even goes into reverse, I want you to be ready. Advice To The Fortunate If your company or your industry is one of the fortunate ones, here are some financial strategies for taking advantages of the good times and preparing for the inevitable slowdown: Weed out marginal or unprofitable sales accounts now while you can best afford it. Build long-term relationships based on current profitability, not promises of future growth. Strengthen your balance sheet by using your customers' prosperity to insist that they pay their bills faster, squeezing your inventories and using the cash to reduce payables, getting unsecured long term debt now, leaving yourself more collateral and borrowing power for the time you will need it. Focus your strategies on faster asset turnover, wider gross margins, stronger relationships with stronger customers to make your business less vulnerable to the downturn when it comes. Are prices in your industry dropping? If so, start figuring out how to eliminate long-term debt from your capitalization. In a deflationary environment, real interest rates are very high and your debt will have to be repaid in increasingly valuable dollars. (It's the mirror-image of the way we had to think in the 1970's.) "When prosperity comes," says Confucius, "do not use all of it." Thinking In Survival Mode And if your company is struggling with its own depression, try thinking "outside the box." Consider restructuring your vendor debt. In the last eighteen months, CFO On Call has done two informal debt restructurings for central Ohio companies that reduced accounts payable in one case by 75% and by nearly 90% in the other. It wasn't easy, but the companies and their vendors recognized the realities and took the difficult steps that insured survival. Your ability to think in survival mode, in both good times and bad, is an essential element in achieving a solid and sustainable prosperity. - Jerry Griffin
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