These COGITA ideas for surviving the global financial crisis were prompted by changes we faced with our clients during 2007, 2008, and 2009. Established 1983, COGITA is the oldest ERP manufacturing software sales and support company in Australia and New Zealand. COGITA sells and supports the Epicor Vantage ERP software. COGITA supports customers using Qad MFG/PRO ERP software.

1. Keep cash flow positive. By cash flow, we do not mean cash or cash equivalents. We mean the flow of cash. More than that, we mean the flow of cash from operations. If cash flow from operations is not positive then your enterprise will not survive. This is true at all times. Not just in the global financial crisis (GFC). But the GFC has destroyed credit availability - making credit unlikely to be a source of operating funds. Therefore negative cash flow from operations is a sure sign of imminent financial disaster. In the current economic conditions an enterprise with, even, $1 of reliable positive cash flow is greatly superior to enterprises with negative cash flow.

Reflection: Many enterprises contain tremendous waste and it is possible to cut 20% in operating expenses (the waist line) without severely compromising service to the top 20% of customers. A P&L statement with a fat, or obese, waist line foretells an unpleasant demise.

2. Check your sales pipeline quality. Your enterprise cannot keep cash flow positive solely by cutting operating expenses. Your enterprise must also feed your P&L statement's top line by making sales of sufficient profitability. During the GFC, sales pipelines are unusually susceptible to churn at the end point. More and more sales stop abruptly at the point where the sales prospect normally pays for part or all of their purchase. Prospects and their enterprises are now vulnerable to unexpected swan dives in demand from their customers. This can be enough to make a prospect hesitate again at the time they are scheduled to pay you for their purchase. Also it is wise for you to expect that your prospects report to a chain of command which will be surprised, at the last moment, that your prospects are about to spend precious cash on purchasing your product or service. Expect the chain of command to exercise its authority and call a halt to the purchase of your products; especially if your products include expensive capital assets. Make the safe working assumption that your sales force must more thoroughly clarify the chains of command in your prospects' enterprises. Take appropriate action to verify that the chain of command is informed about the benefits that your prospect seeks by purchasing your products and services. Make certain that the chain of command desires the benefits when they are expressed as net cash generated by the purchase of your product/service. Overcome the temptation to avoid the work of comparing the cash which the prospect expends to purchase your products and services with the cash generated or released by those purchases. This is the net cash. If the chain of command does not desire the net cash in a time of GFC then it is unlikely that the non-cash benefits will release the chain of command's purse strings. If your sales force identifies these doubtful chains of command promptly by performing a self-check (no happy ears sprouted since the last self-check) periodically then your sales force is effective enough to spend its time productively in the pursuit of better quality sales leads and prospects. Otherwise re-train or replace your sales force. Do it quickly because time is of the essence.

Reflection: During the GFC, timely, good quality sales are as important as low operating expenses. Be extremely sceptical about the timeliness and quality of your enterprise's sales pipeline and forecasts. It is wise to increase the level of positive scrutiny on the mindset, behaviours and effectiveness of your sales force.

3. Take action, now, to refinance or eliminate due debt so as to keep cash flow positive. Large interest payments, on debt, and partial or total debt (term or current) repayments within the next 30-180 days are extremely dangerous for businesses with weak or negative cash flow. If you are in this position then you need to be prepared for stern questions from your bankers, trade creditors and other sources of your debt funding. Before you meet with your bankers, trade creditors and funding sources you should have made praise worthy progress in (1) and (2) above. The worse your cash flow and sales pipeline quality the more you need the help of an independent advisor to sift the conflicting data and priorities in your enterprise and create a short list of survival steps for persuasive presentation to bankers and trade creditors.

Reflection: Titans and giants of commerce and industry have collapsed and are still collapsing in USA, UK, Russia, Europe, Asia, Australia and New Zealand because they could not refinance or repay their debts.

4. Adopt a bipolar mindset. Make ready for the unexpected with the practised, drilled, and contemplative calm of the expert martial artist who readies themself for battle - fully anticipating injury as well as ultimate victory. Survive today if that is the most you can achieve. But maintain a reserve of leadership and cash to rebuild the future.

Reflection: 1929's Great Depression, 1987's global stock market crash, 1997's Asian Financial Crisis and the 2001's DotCom bust, together with their negative effects, are past events.

Note: The term bipolar as it is used in this article was coined by McKinsey Consultants at the New Zealand Prime Minister's Jobs Summit on 27 February 2009.

5. Create zoned performance indicators. Most enterprises have cheap and nasty key performance indicators. They present a vignette of  the immediate and recent past. Ordinarily this abstraction and focus on the past has few negative, immediate, consequences - because, all other things being equal, most enterprises can muddle along and take a long time dying. But the GFC is not the usual yada yada. Fast reaction time is a pre-requisite for survival and financial buffers now confer endurance rather than sure survival. Therefore the normal operating statements for operating cash flow, accounts receivable aged trial balance, daily cash balances, revenue per head, sales pipeline, marketing, and customer satisfaction must be modified. In the modifications each statement must be changed appropriately to show past, present and forecast levels on a time line of days or weeks or months. The forecast levels must be zoned: green for OK, yellow for change course and move back into the green zone while getting ready to execute the evasive action & recovery plan, and red for all hands on deck take evasive actions, right now, until performance is back in the yellow zone. These zoned forecast levels are the zoned performance indicators. Contact us with a short eMail by clicking here if you would like help to create zoned performance indicators for your enterprise.

Reflection: Look to the front and listen to the rear. Watch your zoned performance indicators with a bipolar mindset.

6. Do it cheap and nice. Everything is relative. Einstein proved it and life confirms it. So there is little that cannot be done cheaper and just as nice. Your enterprise can still get that necessary raw material or resource. But only if you invest the time to make a compelling case for your supplier to change their terms, conditions and price and so help you to reduce your enterprise's waist line. Your customer can still buy that product or service that you are desperate to sell so as to support your enterprise's top line, bottom line and current assets. But only if you are willing to change your selling terms, conditions and price. Find a cheaper way; negotiate another option. And get the job done in ways appropriate to a time of global financial crisis.

Reflection: Yesterday's excess is tomorrow's poverty. Therefore, in a crisis, survival and desperation compel people to be more negotiable in buying what they need and selling what they have. This creates opportunities to do it cheaper and nicer. But avoid cheap and nasty.

7. Give your people a simple and powerful guideline. Pressure distorts the environment in part or in whole. Then communication and information cause abnormal effects. If your enterprise is under extreme financial pressure, then too much communication and too much information is more counter productive than usual. Then it is all the more important to harness all effort and decision making to the global goal of survival without stifling local, personal and individual professional initiative. This is a specific challenge to your leadership. How will you harness all of your people to a single set of traces called 'survival' yet give them freedom to use their individual initiatives in concert with each other, reinforcing each other? Resolve the dilemma by adopting a bipolar mindset: give your people a simple guideline that ensures they will make individual decisions which serve the collective purpose of survival. Lead the transformation in your people to do everything so as to increase throughput (T) while reducing inventory (I) and operating expenses (E). In COGITA we call this three variable equation the TIE rule because it ties together all the decisions and behaviours in an enterprise.

Reflection: Cause and effect respects noone. It is the great leveller. And builder. Simplicity and power are the hallmarks of COGITA's TIE rule. It has  profound consequences. The TIE rule is the principal, most effective and self funding means of converting effort and investment into hard cash.

8. Love your customers. During the global financial crisis your efforts, to survive or prosper, are worthless without customers. Identify your top 20% of customers and let your best people loose with the TIE rule to satisfy and make these customers ecstatic. When your best people apply the TIE rule with ingenuity and enthusiasm while seeking ways to make your customers ecstatic and to improve the TIE of their businesses, your people's efforts become self funding and sustainable. Not a bad outcome during a GFC. Using the example set by your best people, let the rest of your people loose with the TIE rule to seek out the rest of your customers and find ways to make their businesses more cash flow positive and profitable.

Reflection: Customers don't just make the world go round. They start it up again when it stops.

9. Build a little buffer. The GFC has exposed the lack of financial buffers and fuses (circuit breakers) in globalisation's supply chains and networks. Or perhaps there were plenty of buffers and fuses but they were in the wrong place. The effect is the same: value and capital collapse. Enterprises with buffers and fuses in the correct place are enterprises with internal leadership capability and financial capacity to survive adversity. If your enterprise is in crisis then your primary challenge is a character challenge: to lead effectively. Measure your character by building a little buffer of cash throughout the crisis. The size of the buffer matters little. The size of your character matters greatly.

Reflection: Proverbs 6:6 Go to the ant, thou sluggard; consider her ways and be wise:

10. Put out a life boat. Start one or two highly entrepreneurial, "cheap and nice," ventures with relatively low cash requirements and potentially high upsides for the top line and bottom line. To be without options is to be without hope.

Reflection: ##Reset## Reset is not a bad thing. Why can your idle or low utilisation assets not be harnessed to making a crust for today? Or at the very least, this time tomorrow?

COGITA is a specialist. COGITA sells and supports ERP manufacturing systems, like Epicor's ERP product, for design-to-order and make-to-order and engineer-to-order manufacturing companies in the private sector. COGITA also supports ERP manufacturing systems, like MFG/PRO, for FMCG (fast moving consumer goods) and CPG (consumer packaged goods) manufacturing and distribution companies. COGITA has been doing this for decades.

Reflection: COGITA survived, and ultimately profited from, the 1987 global stock market crash as well as the subsequent regional and global crises. COGITA tithes to build financial buffers against adversities such as the GFC. Click here for more information about COGITA.

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