Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
How to Ensure Financial Health Ahead of an Economic Downturn
As we all know, over the last few months, COVID-19 caused a shutdown of many aspects of the U.S. and world economies. While the Great Recession of 2008 was caused by factors that were more industry-specific, such as the subprime mortgage crisis, the economic downturn that is projected to come out of the shutdowns mandated due to COVID-19 is likely to be more wide-ranging in light of the non-discriminative impact of the virus. Even hospitals, which are on the frontlines of combating COVID-19, felt the impact as fewer patients came for non-emergencies and as elective surgeries were postponed. Given this outlook, now is a critical time for companies to reassess their business and finances so that they can be prepared for the future. Proper planning is key to ensuring a company's financial health when facing an economic downturn. Although companies will come into such planning with different levels of financial health, the same considerations can be helpful in determining the best path forward.
Accounting for Existing Budgets and Projecting for the Future
A good starting point is the budget and plan you initially had for the year. We are already a number of months into the COVID-19 crisis, so consider: How have revenues changed since shutdowns and other governmental restrictions went into place? When are the locality's restrictions projected to end, and when will your business be able to get back to business? Although businesses may be opening back up, customers will likely not have the same spending habits as they once did. Are there ways that the business can transition to take into account the "new normal" that the world is settling into? Restaurants who primarily were sit-down restaurants have transitioned during this time to take-out and delivery services. Retailers whose locations were closed to customers have transitioned to curbside pick-up alternatives. Be creative with the solutions, but also be careful of solutions that have associated costs and expenses that may not be justified.
Additionally, consider preparing projections of your expectations for your business and particular industry over the next six to 12 months. These projections could have multiple variants, such as different timings for governmental restrictions to be lifted and likelihoods of additional restrictions in the future. They should also take into account historical trends for your industry in prior economic downturns. How customers responded and interacted with your business and industry during the Great Recession could be an indication of their response to the next economic downturn. If there are certain goods and services that your customers gravitate toward when they do not have as much disposable income, consider focusing the efforts of the company toward those goods and services. Having a good understanding of these issues and what they may mean for your business will provide a good foundation for revising the prior budget and plan for the year and considering what the company's next steps should be to implement the new budget and plan.
Securing and Conserving Capital
In any economic crisis, "cash is king." Conserving cash and/or access to credit are key to ensuring that a company survives, and hopefully thrives, during an economic downturn. Any discretionary spending should be largely, if not entirely, restricted during the downturn. Capital expenditures that were budgeted and planned prior to the downturn should be reconsidered. What, if any, capital expenditures are critical to the continued operation of the business and/or are projected to have significant short-term value for the company? It may make sense to continue with any such critical expenditures, but to postpone all other capital expenditures.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
There's current litigation in the ongoing Beach Boys litigation saga. A lawsuit filed in 2019 against Nevada residents Mike Love and his wife Jacquelyne in the U.S. District Court for the District of Nevada that alleges inaccurate payment by the Loves under the retainer agreement and seeks $84.5 million in damages.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Transfer Tax Implications on Real Property Leases
The real property transfer tax does not apply to all leases, and understanding the tax rules of the applicable jurisdiction can allow parties to plan ahead to avoid unnecessary tax liability.