Trust Your Scenarios, Not Your Gut

Trust Your Scenarios, Not Your Gut

Buzzwords that don’t help you get to where you need to be with your business or real estate project:

“Soft Landing,” “Inflationary New Normal,” “Mild Recession,” “Severe Recession”

If you’re a savvy business or property owner, you’re already running worst-case scenarios and adjusting.

The strength of multiples (the amount a buyer will pay for your cash flow) shows momentum is slowing, especially with debt becoming more expensive.

Can you afford to wait? Will your investors have the patience?

How do you adjust your diligence efforts if you are a buyer or seller?

Build Flexibility — Understand the most likely scenarios for your industry. Communicate with your staff to find those weaknesses and adjust.

For Business — Is it pricing? Manufacturing? Supply Chain?

For Real Estate — Is it rental rate growth? Vacancy? Unexpected Capital Expenditures?

Update your Proforma — It’s easy to assume growth because your last three years of financials said so. With the increasing costs of capital, precise numbers will inform your decision-making process. It will ensure you’re stronger when things get more challenging.

Fight Inflation — Re-read your vendor contracts. Are they indexed to inflation? How sensitive are your customers to prices going up?

Match your gut feeling with some analytical thinking.

You’ll make better, faster, and more accurate decisions .

What else do you want to know? Drop it in the comments.

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