The credit crunch is rapidly making its way from Wall Street to Main Street and squeezing businesses across all industries. Slowing growth, weakening demand and reduced lending by banks compound an already difficult environment in which key commodity prices are rising rapidly.rnWhile the food industry may prove more resilient than others, our general advice to clients is to take proactive steps to prepare for potentially challenging days ahead. Following is a 10-point checklist of things to consider as you manage through this difficult time - distilled from a much longer report from Grant Thornton LLP. With careful planning and foresight, you might even be able to turn conditions to your advantage. Businesses that are well capitalized, well positioned and well managed should find opportunities.rn1. Cash is king: If you have cash on your balance sheet, you have a greater degree of flexibility in your decision-making. Cash is the lifeblood of any business, and it matters more than earnings. More and more, bankers, investors and advisory professionals focus on the often-ignored cash flow statement. If earnings are growing faster than cash flows, red flags are raised.rn2. Be relentless on cost control: In order to maintain current or historic levels of profitability in an environment characterized by decreasing demand and increasing commodity prices, you will almost certainly need to cut costs and spending where possible. Tough economic conditions require a razor-sharp focus on cost containment at a minimum, and on cost cutting where possible.
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