Connect with us

David Brown

Why It May Be Time to Tighten Your Balance Sheet

Economic warning signs mean it’s time to prepare for a recession. Here are four ways to start.




“It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness.” — Charles Dickens

FOR ANYONE FOLLOWING the stock market at present (or for that matter cryptocurrencies, the property market or any other asset bubble), you could be forgiven for requiring a strong dose of medicine each day just to survive. Economically, we live in a time that can best be described as “interesting” — providing, almost simultaneously, great wealth opportunities and widespread financial destruction, depending on which side of the ledger you sit. Those who have been involved in tourism over the last two years have been decimated, whereas anyone providing a service that can be done from home has been printing money. The rest? Somewhere in between.

The true impact of Covid lockdowns has been deferred by a wave of government money, but the consequences of these actions are now starting to catch up with us. Supply restrictions, combined with too many dollars chasing too few products, has resulted in rising prices. In an effort to curb this, central banks have reverted to their trusty handbooks and gone with the tried and tested method of raising interest rates to curb borrowing and demand. How this plays out will be interesting to say the least.


What we can be sure of is the cost of money will be increasing, which will have a material effect on the time value of holding money and the cost of borrowing it. To protect yourself in these times, it pays to review your balance sheet and see how this increased cost will affect your business.

Review all debt. Are you able to comfortably manage a rate increase? At what interest rate will things start to become tight? You’re best to know these answers now. Are you able to refinance and lock in some certainty before money becomes more expensive?

Build a cash buffer. Sitting on cash during times of rising inflation is not always a good strategy but it will buy you some time at present. Rising interest rates will, at least, ensure you get a better return on your money while you sit on it.

Find more capital. It may not be necessary but, if the need arises, can you inject more capital into your business? If so, where can it come from??

Sort your debtors and creditors out. Retail is a wonderful cash business, but if you do have anyone buying on account, the cost of not getting that money in could be about to go up. Likewise, many of your creditors may start to put more pressure on you to pay your accounts promptly. Planning will prevent this being a shock if they ask.

The warning signs of economic uncertainty, and possibly a severe recession, are there. Head them off while it’s easier and cheaper to prepare.


David Brown is the president of Edge Retail Academy, a leading jewelry business consulting and data aggregation firm that provides expert business improvement plans to help with all facets of your business, including improved financials, healthier inventory, sales growth, increased staff performance, recruiting and retirement/succession planning, all custom-tailored to your store’s needs. They offer Edge Pulse to better understand critical sales and inventory data, to improve business profitability, benchmark your store against 1,200-plus other Edge Users, and ensure you stay on top of market trends with their $3 billion-plus of industry sales data. Contact (877) 569.8657, ext. 001, [email protected] or



Time to Do What You've Always Wanted? Time to Call Wilkerson.

It was time. Teri Allen and her brother, Nick Pavlich, Jr., had been at the helm of Dearborn Jewelers of Plymouth in Plymouth, Mich., for decades. Their father, Nick Pavlich, Sr., had founded the store in 1950, but after so many wonderful years helping families around Michigan celebrate their most important moments, it was time to get some “moments” of their own. Teri says Wilkerson was the logical choice to run their retirement sale. “They’re the only company that specializes in closing jewelry stores,” she says. During the sale, Teri says a highlight was seeing so many generations of customers who wanted to buy “that one last piece of jewelry from us.” Would she recommend Wilkerson? Absolutely. “There is no way that I would have been able to do this by myself.”

Promoted Headlines

Most Popular