With quarter three GDP growth coming in at a very low 0,2%, companies are set for challenging times as the global economic slowdown appears to have arrived in South Africa. But there's a lot organisations can do to ensure they survuve the tough times.

"While things will be tough, with many issues beyond the control of management, there are some operational strategies which can help manage and contain the impact of the downturn" says Tom Winterboer, banking leader at PricewaterhouseCoopers SA. "Some of these may seem obvious but companies can tend to overlook the simple and the obvious in these volatile and panic-stricken times."
The starting point is to take a closer look at the business, bearing in mind that the goal posts have moved, and significantly so.
"And they continue to move" says Winterboer. "Get to grips with the reality of the business and the economic environment, as it is, and not as you would like to see it. Understand exactly what aspects of the downturn are impacting your business and what is presently keeping it going. Identify what you truly do best, and why."
As uncertainty and volatility are the order of the day, Winterboer says tough decisions must be made, and on time.
"Procrastination in these conditions will leave you way behind. Management must not be afraid of being decisive. Those who come out of this downturn intact are the ones who are right now relentlessly focusing on their key value drivers and risks and are making decisions which will positively position themselves for the anticipated and eventual upturn."
Citing a long-standing business concept, and particularly relevant in these difficult conditions, cash is king.
"Ensure your finances and working capital are in good order and protect liquidity"says Winterboer. "There must be a hands-on approach to cash management and a remote or detached style is completely inappropriate. Re-examine all treasury, financing, funding and retirement exposures and constantly monitor financial and non-financial performance against various covenant conditions that may apply."
Business has to concentrate on what really matters and cannot afford to be distracted with peripheral and detracting issues. Evaluate which products, customers and channels are creating or destroying value and react accordingly. With long term capital investment programmes, consider which ones should be deferred to a later time.
Cost-cutting will be a focus of all companies and the cost base needs to be appropriately managed. This does not mean across-the-board cost cutting but rather a more focused and targeted approach, simplifying structures when required and extracting better value from current expenditures.
"Reliable and prompt management information is crucial in these times" says Winterboer. "Key performance indicators must be clearly defined, and understood, to ensure any improvement initiatives do effectively add to customer and business value. Decisions must be taken on accurate facts and must be timely."
An economic downturn means management must be quick to react and this can be achieved through planning for different scenarios, anticipating a range of possibilities that could lie ahead. "Winning companies are agile and flexible and prepare in advance for a number of operational, financial and workforce scenarios that could result from the downturn."
Winterboer emphasizes that it now become more crucial to recognise the value of people. "Keep open the communication channels with the workforce. Remuneration and incentivisation schemes remain important even when businesses are not generating exceptional profits, as a company needs to retain its key staff in a downturn. Strategies involving outsourcing and partnerships should be re-evaluated, but innovatively used and even consider taking on exceptional talent should it suddenly become available – as the opportunity may not present itself again."
Employees are not a company's only stakeholders and all other relevant parties need to be engaged on how the downturn affects their specific interests. Once again, open, early and regular dialogue is vital.
Winterboer concludes that an economic slowdown does not mean retreating and waiting until things get better. "Companies need to get out there with some innovative strategies, investing in growth opportunities which present themselves when least expected. These conditions offer great opportunities, for those who are informed, to negotiate transactions and deals on extremely favourable terms."