The Credit Crunch

The 'credit crunch' is rapidly making its impact felt from Wall Street to Mumbai Stock exchange and squeezing businesses across a wide swath of industries. Businesses today are facing challenges extending from slowing growth, a weakening demand and reduced lending by banks. While some geographies and industries are proving more resilient than others, Grant Thornton's pool of experts have come out with a 10 point check list for entrepreneurs on how to manage the 'credit crunch':

• Cash is limited and consequently cash flows are restricted in such circumstances
• Such tough economic conditions require much more focused cost management
• Focus should be on clearly identifying a strategy and combining it with focused and relentless management to implement that strategy
• Tax, in its various forms, is usually one of the biggest overheads in a business and this warrants careful attention as part of cost management
• Investments in assets in a downturn scenario should be avoided
• While the mega deals may appear to be drying up in the short term, ambitious and well-funded companies continue to see the value of strategic acquisitions and are picking up bargains to supplement organic growth  - keep an eye out for suitable opportunities
• People are critical and their motivation levels need to be upheld and maintained
• Bank lending will be restricted in such circumstances
• Right size and not necessarily downsize (although that may be required in certain circumstances)
• Separate personal wealth from corporate earnings and resist the temptation of aligning these