Mais conteúdo relacionado S&G Navigating The Recession 0616092. Navigating The Recession
I. Introduction
Shepherd & Goldstein ~ Curtis A. Feldman, CPA
TD Banknorth ~ Ed Nunes
Curtis A. Feldman, CPA 2
© Shepherd & Goldstein LLP and RANONE June, 2009
3. Navigating The Recession
Shepherd & Goldstein’s service
focus is – Making a difference in
our client’s lives via our Advisory
and Business Development
Services.
Curtis A. Feldman, CPA 3
© Shepherd & Goldstein LLP and RANONE June, 2009
4. Table of Contents
I. Introduction
II. Change is Necessary
III. Four Essential Ingredients in Recession Navigation
1. Stabilize the Business
2. Revise Your Value Proposition and Increase Sales
3. Modify/Change Operations
4. Cash is King
IV. Financial Management of the Business
V. In Conclusion
Handouts
Customer Centricity Checklist
Navigating Through The Economic Crisis Articles
Seminar evaluation
Curtis A. Feldman, CPA 4
© Shepherd & Goldstein LLP and RANONE June, 2009
5. Navigating The Recession
II. Change is necessary
Curtis A. Feldman, CPA 5
© Shepherd & Goldstein LLP and RANONE June, 2009
6. Navigating The Recession
“May you live in interesting times”
Ancient Chinese Curse
Curtis A. Feldman, CPA 6
© Shepherd & Goldstein LLP and RANONE June, 2009
7. What Recession?
“Our Company has chosen to not
participate in the current recession”
Quote from an anonymous CEO
Curtis A. Feldman, CPA 7
© Shepherd & Goldstein LLP and RANONE June, 2009
8. A Whole New World Of
Challenges
From:
• Real estate to stock investments, to
• Credit line decreases, to
• Credit unavailability, to
• Massive layoffs/termination, to
• Home foreclosures, to
• Bankruptcies and Business closings
Both consumers and businesses have been
hit and hit hard!
Curtis A. Feldman, CPA 8
© Shepherd & Goldstein LLP and RANONE June, 2009
9. A Whole New World Of
Challenges
Stuck in a ‘do nothing’ strategy?
• Frozen in inaction because of the
vastness of economic change?
• Riding it out and waiting for things
to return to where they were?
• Making small unconnected changes
here and there?
“Given the vastness of the economic change now under way, the
temptation for many planners will be to gaze mesmerized at the
unfolding crisis.” McKinsey Quarterly
April, 2009
Curtis A. Feldman, CPA 9
© Shepherd & Goldstein LLP and RANONE June, 2009
10. A Whole New World Of
Challenges
Who Moved My Cheese
When mice lose their food source, they go off to find
another. But when humans lose something, they’re
likely to stay put, hoping it will somehow appear.
We weren’t raised to adapt to change.
Spencer Johnson, Author
People Magazine
May 1, 2000
Moral ~
The wisest response is not to wait or whine,
but to suck it up and deal with it.
Curtis A. Feldman, CPA 10
© Shepherd & Goldstein LLP and RANONE June, 2009
12. 1st Lack Of Consumer Capacity
Three ways to sustain consumption
• Earn money
• Borrow
• Spend down savings
Curtis A. Feldman, CPA 12
© Shepherd & Goldstein LLP and RANONE June, 2009
14. Unemployment Claims
Curtis A. Feldman, CPA 14
Source: © Shepherd & Risk Blog and RANONE
Calculated Goldstein LLP June, 2009
15. Mortgage Equity Withdrawals
Curtis A. Feldman, CPA 15
Source: © Shepherd & Risk Blog and RANONE
Calculated Goldstein LLP June, 2009
16. Case-Shiller Real Estate Index,
Year/Year Change
Curtis A. Feldman, CPA 16
Source: © Shepherd & Goldstein LLPOffice
Congressional Budget and RANONE June, 2009
17. Personal Saving Rate
Curtis A. Feldman, CPA 17
Source: © Shepherd & Goldstein LLP and RANONE
Baseline June, 2009
18. 2nd The Aging Of America
Curtis A. Feldman, CPA 18
© Shepherd & Goldstein LLP and RANONE June, 2009
19. 3rd The Need For Tax Increases
• Budget Deficit
• Boomer’s
o Social Security
o Healthcare
Curtis A. Feldman, CPA 19
© Shepherd & Goldstein LLP and RANONE June, 2009
20. Accept And Maintain Control
• Employees are looking for your strong
leadership and inspirational voice.
• Acknowledge the extreme difficult
environment we’re in, but also accept it.
• After acceptance you can focus your
attention on a corrective plan.
Curtis A. Feldman, CPA 20
© Shepherd & Goldstein LLP and RANONE June, 2009
21. Be Proactive
In The Seven Habits of Highly Effective Business,
Stephen Covey defines his habit number one, being
proactive, as following:
“It means more than merely taking initiative. It
means as human beings we are responsible for our
own lives. Our behavior is a function of our
decisions, not our conditions.”
Curtis A. Feldman, CPA 21
© Shepherd & Goldstein LLP and RANONE June, 2009
22. Be Proactive
Conditions are unpleasant
• Lots of troubling things happening
• Don’t waste time worrying about them
• You can’t directly change them
Direct time to things you can control:
the choices on how you are going to
move forward
Curtis A. Feldman, CPA 22
© Shepherd & Goldstein LLP and RANONE June, 2009
23. A Whole New World Of
Challenges
“This is not a cycle, this a reset.”
Jeff Immelt
GE Chief Executive Officer
“If this is a reset, it’s time to reorganize…
structures for today’s realities, rather than
cling to the sensibilities of the 20th century.”
Tom Brokow
NY Times
April 20, 2009
Curtis A. Feldman, CPA 23
© Shepherd & Goldstein LLP and RANONE June, 2009
24. Don't Sit Back And Become A
Victim Of The Times
Right now there are businesses and market
segments that are making record profits.
• Find new markets at higher prices
• Be open to consider all new
opportunities
• Be pro-active; Re-invent yourself!
It’s time to ACT!
Curtis A. Feldman, CPA 24
© Shepherd & Goldstein LLP and RANONE June, 2009
25. Leading Change
To minimize a team’s resistance to change, you
must be seen to be actively involved in working
on a lot of little things – not all at once, but
systematically designing, implementing,
reviewing, redesigning, measuring, and most
importantly, not subsequently ignoring.
Curtis A. Feldman, CPA 25
© Shepherd & Goldstein LLP and RANONE June, 2009
26. What’s The Current Global View?
• Finding opportunity in turmoil
o by entering new markets where
weakened competitors are;
o hiring talent that would
otherwise not be available;
o seeking M&A opportunities.
• Smaller & private companies
are in a better position to react
quickly McKinsey survey done in Nov.’08
Curtis A. Feldman, CPA 26
© Shepherd & Goldstein LLP and RANONE June, 2009
27. Help is on the way
American Recovery and Reinvestment Act of 2009,
signed into law 2/17/09
– $288 Billion - tax relief (not much for small business
owners)
– $144 Billion - State & Fiscal relief
– $111 - Infrastructure & Science
– $81 Billion - Protecting the Vulnerable
– $59 Billion - Healthcare
– $53 Billion - Education & Training
– $43 Billion - Energy
– $8 Billion - Other
Curtis A. Feldman, CPA 27
© Shepherd & Goldstein LLP and RANONE April, 2009
28. What’s The Current Global View?
What steps, if any, has your company taken or does your company plan to
take in the rest of 2009 as a result of the global economic crisis?
0% 10% 20% 30% 40% 50% 60% 70% 80%
Opportunities
Reduce operating costs 75%
Increase productivity 44%
Reduce capital investments 37%
Introduce new products/services to gain market share
34%
from weakended competitors
Restructure 28%
Seek merger or acquisition opportunities 22%
Hire talent that would not have been available
16%
otherwise
Leave certain markets 11%
% of respondents, 1 n=1424
increase hedging 5%
*Respondents that answered “other”
or “do not know” are not shown. No steps 4%
1 The McKinsey survey was in the field from November 5, 2008, to November 10, 2008. It includes responses from 1,424 executives from all
regions, industries, and functional specialties. Forty-one percent represent public companies, and 48 percent represent private ones (the rest are
government-owned or not-for-profit). Fifty-one percent have annual revenues below $1 billion, and 43 percent have $1 billion or more.
Curtis A. Feldman, CPA 28
© Shepherd & Goldstein LLP and RANONE June, 2009
29. What’s The Current Global View?
Area’s Slated for Cutbacks in 2009
Hiring 75%
Capital Spending 64%
Layoffs 44%
38%
Salary & Benefits Freeze
Survey of over300 CFO’s, according to the First Quarter 2009
responses conducted by Financial Executive International and
Baruch College’s Zicklin School of Business.
Curtis A. Feldman, CPA 29
© Shepherd & Goldstein LLP and RANONE June, 2009
30. What’s The Current Global View?
CEOs see dire need for action to deal with recession
The global economic turmoil has made the mood at this
year's World Economic Forum in Davos, Switzerland,
markedly more subdued than in previous years. A
survey by PricewaterhouseCoopers of 1,100 CEOs,
presented at the forum, concludes that corporate leaders
think the need for action to cope with the economic
downturn is urgent. Only 21% of them were confident
about increasing revenue during the next 12 months, a
severe decline from the 50% a year ago. Reuters
(1/28/09)
Curtis A. Feldman, CPA 30
© Shepherd & Goldstein LLP and RANONE June, 2009
31. When Do You Expect An
Economic Upturn To Begin?
By region % of respondents, 1 n=1424
Other
Asia- North developing
Total Pacific Europe America China India markets
By March 2009 3 2 3 1 3 8 6
Apr-June 2009 10 7 8 12 12 19 12
Jul-Sep 2009 17 10 14 20 19 16 16
Oct-Dec 2009 22 29 21 24 19 24 19
Total by the
end of 2009 51% 48% 45% 57% 53% 67% 52%
Total by
2010 or later 46% 51% 52% 40% 47% 29% 44%
*Respondents that answered “other” or “do not know” are not shown.
1 The survey was in the field from November 5, 2008, to November 10, 2008. It includes responses from 1,424 executives from all regions,
industries, and functional specialties. Forty-one percent represent public companies, and 48 percent represent private ones (the rest are government-
owned or not-for-profit). Fifty-one percent have annual revenues below $1 billion, and 43 percent have $1 billion or more.
Curtis A. Feldman, CPA 31
© Shepherd & Goldstein LLP and RANONE June, 2009
32. The Recession? It’s Over, Says
Economist
Jobless claims have peaked, says a member of the
bureau charged with declaring when US recession
begin and end. And in every recession since 1974,
the peak in jobless claims has come within weeks of
the bottom.
According to Robert J. Gordon, one of seven
members of the elite Business Cycle Dating
Committee of the National Bureau of Economic
Analysis, who decide officially, for the record
books, when recessions begin and end – usually
many months after the fact when the decision is
rally obvious.
MSN Money
05/21/09
Curtis A. Feldman, CPA 32
© Shepherd & Goldstein LLP and RANONE June, 2009
33. Americans Feel Better About
Economy
Stocks were soaring after the Conference Board’s report on
consumer confidence showed a reading of 54.9 in May, a
surge from the upwardly revised reading of 40.8 in April.
Economists had been looking for a reading of 43.
“Expectations are that business conditions, the labor market
and incomes will improve in the coming months,” said
Lynn Franco, director of the Conference Board’s Consumer
Research Center. “While confidence is still weak by
historical standards, as far as consumers are concerned, the
worst is now behind us.”
MSN Money
05/26/09
Curtis A. Feldman, CPA 33
© Shepherd & Goldstein LLP and RANONE June, 2009
34. Americans Feel Better About
Economy
“Expectations about the job market ahead improved much
more, with 20% now indicating they expect there to be
more jobs in six months than now,” David Resler, the chief
economist at Nomura Securities, wrote in a note to clients
this morning. “The improvement in the confidence index
also appears to have put more people in the mood to spend
on cars and appliances but caution about the housing market
persists. Overall however, the improved mood of consumers
is encouraging.
MSN Money
05/26/09
Curtis A. Feldman, CPA 34
© Shepherd & Goldstein LLP and RANONE June, 2009
35. Americans Feel Better About
Economy
The end of the recession is in sight
Do not lose your sense of urgency
Do not allow complacency to set in
Keep you and your team focused on the
challenges that still are ahead of us.
Curtis A. Feldman, CPA 35
© Shepherd & Goldstein LLP and RANONE June, 2009
36. The 4 Essential Ingredients
1. Stabilize The Business
2. Review Your Value Proposition
and Increase Sales
3. Modify/Change Operations
4. Cash is King
Curtis A. Feldman, CPA 36
© Shepherd & Goldstein LLP and RANONE June, 2009
37. Stabilize The Business
Slow down or stop leaks in your business
• Cut employee costs to match current and future
sales activity
• Review vendors costs by renegotiating prices or
changing vendors
• Eliminate unnecessary costs
• Identify all sources of cash
o Sell business assets not fully utilized
o Sell of slow moving inventory
o Secure external borrowing sources
o Tap personal assets
Curtis A. Feldman, CPA 37
© Shepherd & Goldstein LLP and RANONE June, 2009
38. Stabilize The Business
Identify Customers At Risk
• Meet with them
• Resolve issues/concerns
• Flatter them with attention
• Continually monitor
performance by asking for
feedback
Curtis A. Feldman, CPA 38
© Shepherd & Goldstein LLP and RANONE June, 2009
39. Stabilize The Business
Gross Margins
• Address major gross margin
problems chewing up cash
• Review and eliminate
product lines/services with
losses or low margins
Curtis A. Feldman, CPA 39
© Shepherd & Goldstein LLP and RANONE June, 2009
40. Value Proposition And Sales
• How do you make money?
• Who are your customers?
• Why do they buy from you?
o Location?
o Price?
o Convenience?
o Value?
o Guarantee or warranty?
o Customer service an support?
o Quality?
o Something unique?
Curtis A. Feldman, CPA 40
© Shepherd & Goldstein LLP and RANONE June, 2009
41. Revise Your Value Proposition
Changing Value Proposition To Meet New
Spending Attitudes
• Emphasize price
• Emphasize value
• Emphasize personal touch
• Shrink sizes as lower cost alternative
• Offer financing
Brain Storm!
Curtis A. Feldman, CPA 41
© Shepherd & Goldstein LLP and RANONE June, 2009
42. Value Proposition And Sales
Why do Customers stop doing
business with someone?
Curtis A. Feldman, CPA 42
© Shepherd & Goldstein LLP and RANONE June, 2009
43. Value Proposition And Sales
Chart of Why People Leave
More convenient to
purchase elsewhere 3%
Relationship
(family/friend) 9%
Miscellaneous 5%
Product/Price/ Time 15%
Curtis A. Feldman, CPA
32% 43
© Shepherd & Goldstein LLP and RANONE June, 2009
44. Value Proposition And Sales
So why do customers search
around for a new provider?
Curtis A. Feldman, CPA 44
© Shepherd & Goldstein LLP and RANONE June, 2009
45. Value Proposition And Sales
68% of customers who leave for a
competitor do so because of
Perceived Indifference
Curtis A. Feldman, CPA 45
© Shepherd & Goldstein LLP and RANONE June, 2009
46. Value Proposition And Sales
This means virtually 7 out of 10 inquiries
lost, walk away because they feel the
business is indifferent to them.
Curtis A. Feldman, CPA 46
© Shepherd & Goldstein LLP and RANONE June, 2009
47. Value Proposition And Sales
It’s SIMPLE right?
So Why Doesn’t Everyone do it or over time Forget?
Curtis A. Feldman, CPA 47
© Shepherd & Goldstein LLP and RANONE June, 2009
48. Value Proposition And Sales
So What Can You Do About It?
Remember that it is much easier and less
expensive to keep an existing customer than
trying to get new ones!
Curtis A. Feldman, CPA 48
© Shepherd & Goldstein LLP and RANONE June, 2009
49. Value Proposition And Sales
Awesome Service
Manage your business through the eyes of
your customer. Remove obstacles and
hindrances in doing business with you.
Curtis A. Feldman, CPA 49
© Shepherd & Goldstein LLP and RANONE June, 2009
50. Value Proposition And Sales
Customer-Centricity Checklist
(delivering quality service)
(handout)
Curtis A. Feldman, CPA 50
© Shepherd & Goldstein LLP and RANONE June, 2009
51. Value Proposition And Sales
Customer Commitment
10 Point Checklist for New Ideas
Customers for Life: How to Turn That One
Time Buyer Into A Lifetime Customer
(Carl Sewell and Paul Brown)
Curtis A. Feldman, CPA 51
© Shepherd & Goldstein LLP and RANONE June, 2009
52. Value Proposition And Sales
10 Point Checklist for New Ideas –
Customers for Life: How to Turn That One Time
Buyer Into A Lifetime Customer
(Carl Sewell and Paul Brown)
1. What’s the benefit to the customer?
2. Will the customer easily understand that fact?
3. What impact will this idea, program or system have
on our employees?
4. How will it effect our existing systems?
Curtis A. Feldman, CPA 52
© Shepherd & Goldstein LLP and RANONE June, 2009
53. Value Proposition And Sales
5. Is anybody else doing it successfully? What can we
learn from their experience?
6. What could go wrong?
7. Will it give us an advantage over our competitors?
8. How much will it cost?
9. Will it make money
10. When should we evaluate it?
Curtis A. Feldman, CPA 53
© Shepherd & Goldstein LLP and RANONE June, 2009
54. Participant Exercise
• Use one of your own customer service
strategies or pick out a new one from the
customer centricity checklist.
• Apply 10 Point Checklist for New Ideas –
Customers for Life: How to Turn That One
Time Buyer Into A Lifetime Customer
(Carl Sewell and Paul Brown)
to see if your strategy passes the test.
Curtis A. Feldman, CPA 54
© Shepherd & Goldstein LLP and RANONE June, 2009
55. Value Proposition And Sales
Increasing Sales Ideas
10 Common Strategies
Curtis A. Feldman, CPA 55
© Shepherd & Goldstein LLP and RANONE June, 2009
56. 10 Common Strategies For
Increasing Sales & Profitability
1. Implement systems that measure and
track the results of ALL of your
marketing, advertising and publicity
efforts.
2. Look for new ways to re-position
products or services you provide to
attract a new market segment.
3. Find new distribution channels for
your products through the Internet or
through others who are selling
complimentary products or services.
4. Create joint venture arrangements with
other complimentary, not competing
businesses.
Curtis A. Feldman, CPA 56
© Shepherd & Goldstein LLP and RANONE June, 2009
57. 10 Common Strategies For
Increasing Sales & Profitability
5. Create a "Rewards Referral Program"
for your existing customers.
6. Know the numbers in your business.
Find out what products and services
make the most profits and which ones
make the least. Can you increase that
amount by 10% by adding or bundling
in extra value?
7. Position yourself as the
"Knowledgeable Expert" in your field
and write articles for newspapers or
trade journals and/or do radio.
Curtis A. Feldman, CPA 57
© Shepherd & Goldstein LLP and RANONE June, 2009
58. 10 Common Strategies For
Increasing Sales & Profitability
8. Differentiate yourself from the
competition and give customers “reasons
why" they should do business with you
versus your competitors;
9. Improve your skills as a marketer.
Consider having a business and
marketing coach to assist you with new
ideas.
10. Build stronger relationships with your
customer base through frequent contact,
special offers, and newsletters. Survey
your existing customers to see what they
want and then sell it to them.
Curtis A. Feldman, CPA 58
© Shepherd & Goldstein LLP and RANONE June, 2009
59. Increasing Sales Ideas
How To Increase The Average Sale?
Some strategies you can use to increase your average
transaction value:
• Cross Selling
• Upselling
• Bundling
• Merchandising
• Margins and Pricing
Develop a sales system that includes these strategies
to ensure consistency among team members
Curtis A. Feldman, CPA 59
© Shepherd & Goldstein LLP and RANONE June, 2009
60. Increasing The Average Sale
Cross Selling
• Selling other items with an initial purchase
• Suggest items to complement the purchase
• Key questions can help identify opportunities
• Create ‘checklists’ of items to consistently
offer
Curtis A. Feldman, CPA 60
© Shepherd & Goldstein LLP and RANONE June, 2009
61. Increasing The Average Sale
Cross Selling
Example
• What else could we offer to accompany this
purchase?
• What else would add value and make the use of
this product or service better?
• What else, when coupled with this product or
service, would help customers get the most out
of it?
Curtis A. Feldman, CPA 61
© Shepherd & Goldstein LLP and RANONE June, 2009
62. Increasing The Average Sale
Up-Selling
• Encourage the customer to move from purchasing
a lower end item to a higher end one
• Offer products or services in 3 or more tiers:
o Best or ‘High End’
o Better or ‘Midrange’
o Good or ‘Basic’
• Statistics show that most customers will select the
second tier item when presented with these
options
Curtis A. Feldman, CPA 62
© Shepherd & Goldstein LLP and RANONE June, 2009
63. Increasing The Average Sale
Packaging
• Put complementary products or services
together into a single attractive package
o Products and products
o Services and services
o Products and services
• Creates a high perceived value
• Or…sell upgrades separate from original
purchase (movie ticket and popcorn)
Curtis A. Feldman, CPA 63
© Shepherd & Goldstein LLP and RANONE June, 2009
64. Increasing The Average Sale
“Fire your clients”
Categorize your clients
• By profitability
• By growth potential
• By size
• By payment history
Curtis A. Feldman, CPA 64
© Shepherd & Goldstein LLP and RANONE June, 2009
65. Analyze Your Customer Mix
• Get rid of your “bad customers”
o High demands, a lot of complaints
o Low profit levels
• Use the extra time, energy and resources to
win the new good customers you want.
Curtis A. Feldman, CPA 65
© Shepherd & Goldstein LLP and RANONE June, 2009
66. Modify/Change Operations
1. Inventory and Vendors
2. Marketing, Sales and Pricing
3. Systems and Processes
4. Team/Employees
Curtis A. Feldman, CPA 66
© Shepherd & Goldstein LLP and RANONE June, 2009
67. Modify/Change Operations
Inventory
• Look at how you manage your inventory
o Have enough of the right products in stock but
o Don’t tie up valuable working capital by holding
excess inventory
Despite the improvement in gasoline prices, retailers still face many
challenges from over-extended, under-capitalized consumers," said
Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP.
"Consumers today want to see significant discounts before they are
willing to part ways with their wallets. Retailers should focus on their
inventory assortment, sourcing and pricing strategies, as well as supply
chain management opportunities, to drive value through the system
and to the end customer. Retailers without the right value proposition
will find an increasingly difficult operating environment."
Curtis A. Feldman, CPA 67
© Shepherd & Goldstein LLP and RANONE June, 2009
68. Modify/Change Operations
Use your vendors to preserve your cash on
hand
• Extend payment terms
• Pricing concessions (everyone is asking it
seems)
• Risk of supply disruption (e.g. your major
supplier goes out of business)
Curtis A. Feldman, CPA 68
© Shepherd & Goldstein LLP and RANONE June, 2009
69. Modify/Change Operations
Product pricing
Prices too high?
Lowering Prices Is Not Always The Answer.
• Are you being undercut on prices? Are similar but
cheaper items selling quicker? Are customers
complaining that you prices aren’t competitive?
• Often the first thought in a business is to reduce
prices to stimulate sales and it can work, but at
what cost?
Curtis A. Feldman, CPA 69
© Shepherd & Goldstein LLP and RANONE June, 2009
70. Modify/Change Operations
Caution before reducing prices!
• If you are going to reduce your prices, first
reduce your production or purchasing costs.
If you don’t, you’re likely making your
problems worse.
• Before reducing prices, be sure you know the
reason why sales are slowing. It might not be
price.
• Look at alternatives to reducing prices.
Marketing, advertising and packaging can all
help increase sales
Curtis A. Feldman, CPA 70
© Shepherd & Goldstein LLP and RANONE June, 2009
71. Modify/Change Operations
“The Office”
– Let’s see what Michael Scott’s Accountant says
about price discounting
Curtis A. Feldman, CPA 71
© Shepherd & Goldstein LLP and RANONE June, 2009
72. Modify/Change Operations
Marketing and Sales
Price Cuts
• Have a firm grasp on your margins and how they
affect your bottom line.
• Avoid discounting and price wars. In the past,
only 15% shop on price alone but more often are
given the greatest attention. This percentage is
higher now.
Curtis A. Feldman, CPA 72
© Shepherd & Goldstein LLP and RANONE June, 2009
73. Modify/Change Operations
Product/Service Offerings
• Know what effect it will have on your bottom
line and business strategy. A 10% cut for a
business with a 30% gross profit, requires 50%
more sales volume just to maintain your initial
profit.
Curtis A. Feldman, CPA 73
© Shepherd & Goldstein LLP and RANONE June, 2009
74. Effects Of Price Discounting
Curtis A. Feldman, CPA 74
© Shepherd & Goldstein LLP and RANONE June, 2009
75. Revise Your Value Proposition
Remember that business is PERSONAL…it is
about people.
Clients will value core services that meet basic
needs, but they will value more deeply because
you have satisfied a more personal and
emotional need:
the need to FEEL important.
Curtis A. Feldman, CPA 75
© Shepherd & Goldstein LLP and RANONE June, 2009
76. Revise Your Value Proposition
The Importance Of IMPORTANCE
…much of life is too fast…as the world grows
bigger every day, our desire to FEEL important
grows into a NEED.
THE CLIENT WHO FEELS IMPORANT FEELS
LOYAL.
Curtis A. Feldman, CPA 76
© Shepherd & Goldstein LLP and RANONE June, 2009
77. Rethinking Your Business Model
• Find out what your customers really value.
• Change your business model to match this new
reality.
e.g. mobile phones (old model, lock in
customers with long-term contracts); (new
model, buy cellular minutes as they are
needed over their handsets, via the internet,
through ATM’s or kiosks )
Curtis A. Feldman, CPA 77
© Shepherd & Goldstein LLP and RANONE April, 2009
78. Customers Value
• Make things interesting, easy and comfortable
• Appreciate and reward loyal relationships
• Provide real value, not just cheaper products
• Go green; get inspired with innovative solutions
to health, wellness, sustainability and less
consumption
Curtis A. Feldman, CPA 78
© Shepherd & Goldstein LLP and RANONE April, 2009
79. Modify/Change Operations
Marketing and Sales
• Marketing expenses are often the first cost to be
cut
o Carefully review before slashing
o Spend money to make money (still is true)
o Sales follow the marketing
o Don’t damage important customer
relationships
Curtis A. Feldman, CPA 79
© Shepherd & Goldstein LLP and RANONE April, 2009
80. Modify/Change Operations
• Learn from past history
o McKinsey research of 1,000 companies during
the 2001/2002 recession indicated Companies
that increased spending on sales, marketing and
innovation emerged in the top 25% after the
recession ended.
o They traded short-term profits for long-term
gains.
Curtis A. Feldman, CPA 80
© Shepherd & Goldstein LLP and RANONE April, 2009
81. Modify/Change Operations
Marketing and Sales ideas
• Consider some less expensive marketing ideas
o Reduce size of ads to run more often without
increasing total cost
o Introduce a referral program
o Email and online marketing channels
o Postcards vs. letters
o Personal phone calls to let customers know of
special offerings
Curtis A. Feldman, CPA 81
© Shepherd & Goldstein LLP and RANONE April, 2009
82. Call customers who have left you
• Call and apologize
• Ask why they left you (grass may not be greener)
• Listen and repeat back what you heard
• Ask for another chance-welcome them back
• Offer a new/creative ways to service them
o Creative financing
o Pricing options
Curtis A. Feldman, CPA 82
© Shepherd & Goldstein LLP and RANONE April, 2009
83. Modify/Change Operations
Systems and Processes
Underlying support structure of your business that
keeps all parts of your business running smoothly
• Remove unneeded layers
• Remove roadblocks
• Consider centralization of different back-end
functions
• Use proven internet based systems and
processes to eliminate internal development
and associated costs
Curtis A. Feldman, CPA 83
© Shepherd & Goldstein LLP and RANONE June, 2009
84. Modify/Change Operations
Systems and Processes
Underlying support structure of your business that
keeps all parts of your business running smoothly
• Meet with your team:
o to brainstorm how you can bring greater
value to your customers
o to see how you can streamline your
businesses internal processes by
updating or changing systems
Curtis A. Feldman, CPA 84
© Shepherd & Goldstein LLP and RANONE June, 2009
85. Modify/Change Operations
Systems and Processes
• Don’t scrimp on keeping your equipment,
computer systems and programs up to date
Curtis A. Feldman, CPA 85
© Shepherd & Goldstein LLP and RANONE June, 2009
86. Modify/Change Operations
Fraud Alert For Small Businesses
(WSJ 2/19/09)
Curtis A. Feldman, CPA 86
© Shepherd & Goldstein LLP and RANONE June, 2009
87. Modify/Change Operations
Fraud Alert For Small Businesses
(one more thing to worry about)
• Employee fraud rises in a recession
• You may be vulnerable due to lax internal control
procedures
• Be aware of common signs:
o Change in lifestyle (living beyond their means)
o Controller/bookkeepers who “guard” access to
the books.
o Do not take vacations
Curtis A. Feldman, CPA 87
© Shepherd & Goldstein LLP and RANONE June, 2009
88. Modify/Change Operations
What should you do to help prevent fraud?
• Have bank statement mailed to your house
• Review every cancelled check, signature and endorsement
on the back of the check and check payee
• Look for unusual transfers
• Make daily deposits
• Do not allow financial employees to sign checks
• review payroll reports yourself
• review business credit card statements for legitimate
charges
• Approve all bad debt write offs
• Safeguard your valuable assets (cash, inventory,
equipment, etc)
Curtis A. Feldman, CPA 88
© Shepherd & Goldstein LLP and RANONE June, 2009
89. Modify/Change Operations
If you suspect something is wrong
• Keep quiet
• Hire an expert (S&G, lawyer) to help you
investigate it
• Contact police
o Most employees are ashamed of what they’ve done
and will agree to make a deal to avoid going to jail
Curtis A. Feldman, CPA 89
© Shepherd & Goldstein LLP and RANONE June, 2009
90. Modify/Change Operations
Team/Employees
Your business cannot operate with out good people
• Remind your self why you hired them in the
first place. What has changed?
• Communicate regularly with your team to
avoid them jumping ship
• They need to concentrate on your customer
and your critical success factors for your
new strategic plans, not worried about their
jobs.
Curtis A. Feldman, CPA 90
© Shepherd & Goldstein LLP and RANONE June, 2009
91. Modify/Change Operations
Team/Employees
But…People can often be your best asset!
• Ensure that your best employees
understand how their work contributes
to your success
• Discuss career advancement
possibilities. Recessions can bring lots
of change; roles may shift, and new
career opportunities may open up.
• Owners don’t realize that everybody internally is
watching their every move. People are looking at
you to provide leadership and instill confidence.
Curtis A. Feldman, CPA 91
© Shepherd & Goldstein LLP and RANONE June, 2009
92. Modify/Change Operations
Team/Employees
5 ways to keep employee morale HIGH
1. Spell it out for your employees
2. Ask your employees to be part of the
solutions
3. Show them lots of empathy; face-to-
face and with compassion.
4. Encourage employees to stay positive;
discuss the employee’s options for the future
and explain how you can help.
5. Create a culture that allows them to
innovate and feel empowered; give them
job value beyond a paycheck
Curtis A. Feldman, CPA 92
© Shepherd & Goldstein LLP and RANONE June, 2009
93. Modify/Change Operations
Team/Employees
Strategies to reduce labor costs
• Most obvious . . .layoffs
• Salary freezes
• Restructure compensation to offer performance
bonuses or commissions
• Reduce hours/job sharing
• Time off without pay (i.e. Ford and Chrysler closed
their plants for an extended period often around the 2008
holidays)
• Hire interns (affordable source of energetic, smart labor)
• Outsourcing
Curtis A. Feldman, CPA 93
© Shepherd & Goldstein LLP and RANONE June, 2009
94. Massachusetts Workshare
Program
Program run by the MA Dept of Unemployment
Assistance (formerly the DET) which offers:
• Way to partially layoff employees during a slowdown
• Allows a business to reduce staff ours as much as 60%
• Pay team based on hours actually worked but also
receive pro-rated unemployment checks (usually about
½ of what their wags for the same amount of time
would have been)
• Employees Do NOT have to file a client or report to an
unemployment office to show they been looking for
work
• Unemployment checks delivered to your business and
distribute with regular payroll
Curtis A. Feldman, CPA 94
© Shepherd & Goldstein LLP and RANONE June, 2009
95. Modify/Change Operations
Outsourcing, Outsourcing, Outsourcing
• Consider recruiting motivating & retaining the “best in
class” human capital through outsourcing.
• Be very strategic about adding staff.
Outsourcing offers many benefits:
o Shorter time frame to implementation.
o More cost-effective implementation.
o Access to existing tools & solutions
that have proven track records
o Access to a more diverse base of skill sets & core
competencies.
o Reduction of investment in infrastructure expenditures.
Through outsourcing, your business can gain ground
on your competition who are “down-sizing”.
Curtis A. Feldman, CPA 95
© Shepherd & Goldstein LLP and RANONE June, 2009
96. Modify/Change Operations
Team/Employees - Pay Cuts
Strapped U.S. Companies, while continuing to slash their
work forces, are deploying a once-rare tool to trim labor
costs. . . pay cuts.
According to a recent Watson Wyatt Survey:
• 5% of 117 companies surveyed said they reduced
salaries to cope with the recession
• Another 6% plan to do reduced salaries this year
• 7% of 805 small businesses surveyed said they have
recently reduced salaries
The last time the U.S. had widespread wage cuts was during
The Great Depression.
Curtis A. Feldman, CPA 96
© Shepherd & Goldstein LLP and RANONE June, 2009
97. Modify/Change Operations
Team/Employees - Who is cutting pay?
• Advanced Micro Devises announced a temporary cut in pay
between 5% - 20%
• Caterpillar is cutting executive pay by 50% and many
salaried employees by up to 15%
• Hutchinson Technologies cut employee salaries by 5% for
remaining employees
• Trucking firm, YRC Worldwide, negotiated a 10% pay cut
with union drivers as well as non union employees
• Kulike & Soffa Industries instituted a 10% wage cut for
salaried employees and 15%-20% cuts for executive salaries.
The list goes on . . .
Curtis A. Feldman, CPA 97
© Shepherd & Goldstein LLP and RANONE June, 2009
98. Modify/Change Operations
Team/Employees - Pay Cuts
The realty of this is most employees are not in a position to
argue:
• Fewer people are quitting their jobs (1.4% quit rate
November 2008 vs. 1.8% a year earlier)
• Companies are less worried about replacing their best
workers because the labor supply is simply much higher
• Prices are falling for U.S. Consumers (CPI up only 0.1%
in 2008 vs. 4% in 2007)
• Many employees would prefer pay cuts over a
deeper round of layoffs
Curtis A. Feldman, CPA 98
© Shepherd & Goldstein LLP and RANONE June, 2009
99. Cash Is King
REVENUE IS VANITY; PROFIT IS
SANITY; CASH IS KING
Now more than ever, cash is king!
• Monitor your cash position and
requirements on a regular basis
• Create cash
• Preserve and maximize your cash
Curtis A. Feldman, CPA 99
© Shepherd & Goldstein LLP and RANONE June, 2009
100. Cash Is King
Know Where Your Cash Is
• Install and use a cash flow monitoring
system that tells you where your cash is,
what you owe the banks and vendors,
what is owed to you.
• Cash flow forecasts should be updated
weekly and your bank should be alerted
to potential problems well ahead of time
– they never liked surprises, now they
like them even less.
Curtis A. Feldman, CPA 100
© Shepherd & Goldstein LLP and RANONE June, 2009
101. Cash Is King
The absolute priority is now cash over profits until
things settle down and turn around
Get paid for your products or services:
• Review and tighten up credit policies (not everyone gets
credit)
• Require larger up front payments
• C.O.D.
• Use “friendly” phone calls to encourage timely
payment
• Stop work on slow payers (don’t get further behind)
• Invoice accurately and timely
• Collect payments personally from local customers
• Charge interest on past due receivables
Curtis A. Feldman, CPA 101
© Shepherd & Goldstein LLP and RANONE June, 2009
102. Cash Is King
Other Ways to Create Cash
• Consider drawing down unused lines
of credit – banks may withdraw it if
unused
• Inventory that doesn’t turn should be
converted into cash – even at a loss.
• Identify redundant assets and sell
them.
• Markets may not be great for asset sales, but the name of
the game today is CASH
• Reduce 2009 tax estimates based on 2009 expected
earnings
Curtis A. Feldman, CPA 102
© Shepherd & Goldstein LLP and RANONE June, 2009
103. Cash Is King
Most small business owners do not know what they
are spending on.
• Implement spending policies and controls (authority
levels, who can order)
• Review operating costs (i.e. power, telephone, travel,
health care, etc.)
• Review other discretionary spending (“perks”)
• Spread out annual costs on a monthly basis (e.g.
insurance premiums or maintenance contracts)
• Change spending culture – you lead by example
Curtis A. Feldman, CPA 103
© Shepherd & Goldstein LLP and RANONE June, 2009
104. Cash Is King
Finance assets in stead of paying cash
• Bank financing (not as easy)
• Leasing
• SBA enhanced financing available
• WASHINGTON, March 10 /PRNewswire-USNewswire/ -- United States Senate
Committee on Small Business and Entrepreneurship Chair Mary Landrieu, D-La.,
today praised the Senate for passing an Omnibus Appropriations Act that includes
$546,626,000 for the Small Business Administration (SBA), providing a boost to
the nation's 27 million small businesses. This is a $63 million increase from what
President Bush originally requested and a $47 million increase from what was
appropriated last year when disaster loan funding is excluded.
• "Small businesses are our nation's number one job creators. With unemployment
the highest it's been in a quarter century and 80 percent of jobs cut in the last four
months being from small businesses, entrepreneurs are turning to the government
for help," Sen. Landrieu said. "The Omnibus Appropriations Act will help create
and save jobs by investing in small businesses and funding the programs they
need to survive." 104
Curtis A. Feldman, CPA
© Shepherd & Goldstein LLP and RANONE June, 2009
105. Cash Is King
Help For Small Businesses
WASHINGTON (Reuters) – will announce steps on Monday
(March 16, 2009) to make it easier for to borrow money, using
$730 million in stimulus funds to cut lending fees, boost loan
guarantees and expand other programs, officials said.
• Obama and will announce a plan to increase federal guarantees
under the SBA's most widely used loan program, an official said.
• The current maximum guarantees are 85 percent of loans under
$150,000 and up to 75 percent of larger loans. The guarantee will be
raised to 90 percent with the aim of reducing risk and encouraging
banks to make loans, the official said.
• The administration also plans eliminate a number of borrower and
lender fees on loans originated through its main loan program and a
program to encourage long-term borrowing for major fixed assets
like land and buildings.
Curtis A. Feldman, CPA 105
© Shepherd & Goldstein LLP and RANONE June, 2009
106. New SBA program
SBA's America's Recovery Capital (ARC)
Loan Program can provide up to $35,000 in
short-term relief for viable small businesses
facing immediate financial hardship to help
ride out the current uncertain economic times
and return to profitability.
Curtis A. Feldman, CPA 106
© Shepherd & Goldstein LLP and RANONE June, 2009
107. When All Else Fails-Insolvency
• Close your doors without court assistance
• Chapter 11
o Shields you from your creditors and discharges
overwhelming debts
o Retain control and hope to emerge to continue
o Very expensive ($15,000-$25,000 legal fees)
• Chapter 7
o Court trustee formally liquidates the business
o Out of your hands
Curtis A. Feldman, CPA 107
© Shepherd & Goldstein LLP and RANONE June, 2009
109. Evaluating lending requests
The 5 C’s of Credit
Capacity: Is the borrower capable of paying the new
loan and current obligations?
Collateral: What will be pledged to secure financing?
Character: Measures the integrity of the borrower and
past credit repayment history
Conditions: Assesses the borrower’s industry and overall
economic conditions
Capital: Measures the relationship between debt and
equity in the business.
109
110. Business Scenarios Seeking Financing
Existing Business: In business for 2 or more years with
same ownership, Income verifiable with Federal Tax returns
or Reviewed Financials.
Nominal Start-up: Purchase of existing business operating
at least 3 to 5 years and purchaser has 5 years of
professional and management experience.
True start-up: No clients, business in a new market, new
marketing and business plan.
110
111. Considerations for an existing business 2+
years of operations
Historical and financial strengths of the business
Value of existing business assets
Management and professional experience
20% or > ownership interest would require
personal guarantee
111
112. Considerations for purchasing an
existing business (Nominal Start-up)
Prior financial performance
Collateral review; intangible (client base) vs. tangible
assets (physical fixed assets)
Sources of secondary income
Management and professional experience of purchaser
112
113. Considerations of a true start-up
(no existing patients)
Business plan with 24 months of projections with assumptions
The plan should be reviewed by a technical service provider such
as Small Business Development Center or CPA
Sources and uses of funds analysis
Equity injection typically required (20%)
• Note - 100% financing is usually not an option for
conventional financing. Some specialized lending programs
will offer 100% financing.
Collateral
Secondary sources of income
Personal FICO score
113
114. Financing Options
Owner Private Financing
Traditional bank programs
SBA Guarantee
Specialty Lender
Vendor Financing
Equipment Leasing
114
115. Loan Products
Term Loans
Lines of Credit
Business Home Equity
Lines of Credit (SBHELOC)
Commercial Real Estate
Mortgages (CREMs)
115
116. Term Loans
PURPOSE:
Purchase non-real estate
fixed assets for either an
existing business or a new
business.
FEATURES:
Defined end-date on loan
Fixed monthly payment:
Payments based on principal
and interest installments.
Loan term should not
exceed the “useful life” of
asset
116
117. Lines of Credit
Short term working capital
PRODUCT:
Line of Credit
PURPOSE:
Rectify timing issues: (funding payables while
waiting for receivables)
Purchases of inventory
117
118. Lines of Credit
Short term working capital
REQUIREMENTS:
Usually paid down to zero annually
Renewable
BENEFITS:
Flexible repayment schedule: interest-only options
with flexible principal pay down
Repayment coincides with peak in cash flow
118
119. Business Home Equity
Line of Credit
Similar in nature to the Short Term Working Capital with
the exception of collateral – being a primary residence.
119
120. Commercial Mortgages (CREM)
PURPOSE:
To finance purchases or refinance commercial
buildings or mixed use properties.
FEATURES:
Repayment terms include principal and interest
Loan is secured by a mortgage on the real estate
Rates are generally Fixed for 5 years, with the
payment amortized over 20 years to keep the
payments low
120
121. Credit Guarantees and Enhancement
S B A Enhancements – MOST FEES WAIVED (2009)
Purpose: Used to reduce the risk of the loan and provides a
reassurance to the lender by offering a guarantee
Express Guarantee – 50%
Patriot Express – 90% NEW
Import Express – 90% NEW
Community Express – 90% NEW
7(a) – 90% NEW
TD #1 7(a) SBA Lender in MA 2008
121
122. Credit Guarantees and Enhancement
504 Program
Borrower puts down 10%, Bank finances
50% and SBA 40%
122
123. Credit Guarantees and Enhancement
ARC Stabilization Loan Program
New loan program for SBA
Applicants can start applying for the loan program
6/15/09
Loans will be made by participating commercial
lenders
123
124. Credit Guarantees and Enhancement
ARC Stabilization Loan Program – General Info
ARC loans can be made for up to $35,000
These loans can be used to pay up to six months
worth of business debt
Business debts include mortgages, non SBA
loans, lines of credit and credit cards.
These loans are interest free, no fees & have a
100% guaranty
124
125. Credit Guarantees and Enhancement
ARC Stabilization Loan Program Eligibility
Designed for Viable Small Businesses – Start ups
are not eligible
The business must be in operation for at least the
previous two years
No debt can be more than 60 days past due
Must have been profitable one of the past three
years.
125
126. Credit Guarantees and Enhancement
ARC Application Requirements
Must have financial statements for previous three
years
Must have projections that show profitability for
two years after disbursement of loan proceeds
Must show that your business is suffering an
immediate financial hardship
126
127. Credit Guarantees and Enhancement
ARC – STAY TUNED
More ARC loan information released June 8, 2009
For the most up to date information, visit
http://www.sba.gov/recovery/arcloanprogram/inde
x.html
You can get more information at www.sba.gov
127
128. Questions
Ed Nunes
Business Banker, AVP
TD Bank, NA
74 Concord Street
Framingham MA 01702
B (508) 424-7128
F (508) 620-3729
Edward.Nunes@TDBanknorth.com
128
129. What About A “Do Nothing”
Strategy?
• If you’re cash rich, (and do nothing),
you could be drained gradually and be
bypassed by your competitors
• If you’re cash poor, (and do nothing),
you will eventually be forced to close
down
• A downturn can actually be good for a
well-managed company.
• A way for management to take
advantage of this market opportunity
is through taking the appropriate time
NOW for strategic planning
Curtis A. Feldman, CPA 129
© Shepherd & Goldstein LLP and RANONE June, 2009
130. 5 Things TO DO During A
Recession
1. Do Something!
2. Be sure to do Enough
3. Encourage Referrals from
other clients
4. Create a "WOW" Experience
5. Take Massive Action Now
When you're a small business owner, there's no
"Golden Parachutes", no Stock Options to cash in,
and there are definitely no Government Bailouts
coming your way.
Success or failure of your business
is on your shoulders!
Curtis A. Feldman, CPA 130
© Shepherd & Goldstein LLP and RANONE June, 2009
131. How S&G Can Help
Curtis A. Feldman, CPA 131
© Shepherd & Goldstein LLP and RANONE June, 2009
132. Build Strategic Contingency
Planning Into Your Culture
• What if your risk profile shifts
dramatically?
• What if demand suddenly falls off?
• What if global events disrupt your
supply chain?
• What if prices drop precipitously?
• What if this global recession lasts
for more than a year?
Scenario planning is a critical step toward a
comprehensive contingency strategy; now is a
good time as any to reconsider its use for today
Curtis A. Feldman, CPA
and tomorrow. 132
© Shepherd & Goldstein LLP and RANONE June, 2009
133. Strengthen The Bonds Of Loyalty
• Pay special attention to your
employees. Your efforts to support them
will reap huge benefits for the company
in the future —friends in a trying time
often become friends for life.
• Be a good vendor. Get close to your
customers; unless you’re looking to exit
a particular area of the business, now is
not the time for trying short-term profit
improvement strategies.
The lesson: loyalty is not just the way out
of a recession; it’s the way back
to better-than-normal prosperity.
Curtis A. Feldman, CPA 133
© Shepherd & Goldstein LLP and RANONE June, 2009
134. Watch Out & Act Quickly
Immediate Action Required if you begin to
experience any of these symptoms
• Sales are slowing, and your
profitability is declining.
• Stock levels are increasing.
• Pricing is too high for many
of your customers.
• You know that you have too
many people for the work
needed
Curtis A. Feldman, CPA 134
© Shepherd & Goldstein LLP and RANONE June, 2009
135. Don’t Stop Growing
• Get very aggressive while your competition
pulls back, slashes it’s costs or is asleep at
the switch.
• Reduce extraneous expenses, but resist the
temptation to slash your costs across the
board,
• Resist the urge to cut budgets in the areas of
sales, marketing and business development.
• Sound financial governance and
implementing cost-containment measures is
fine. BUT remember that cost cutting is not
a business strategy.
Curtis A. Feldman, CPA 135
© Shepherd & Goldstein LLP and RANONE June, 2009
136. Improve Communications
• The frequency and the quality of both your internal
and external communications needs to be at an all-
time high. Err on the side of over communication.
• The genesis of most business mistakes can be
traced to poor communication, or worse yet, no
communication at all.
• While strong markets and bullish
economies are forgiving of management
errors, down economies are not. Make
sure that all employees have a clear
understanding of the mission and vision,
and that all stakeholders are inside the
communication loop.
Curtis A. Feldman, CPA 136
© Shepherd & Goldstein LLP and RANONE June, 2009
137. In Conclusion
• Change is necessary
• Stabilize the Business
• Value proposition and sales
• Modify/Change operation
o Inventory and vendors
o Marketing and sales
o Systems and processes
o Team/employees
• Cash is king or managing for cash
• Communicate with your Banker
Curtis A. Feldman, CPA 137
© Shepherd & Goldstein LLP and RANONE June, 2009
138. Conclusion And Closing
Thoughts
• The lack of astute, decisive, and proactive thinking
and strategy can make it much more difficult to
survive the challenges ahead.
• If you wait and see how everything shakes out over
the next few months…. this type of thinking is like
driving a car toward a brick wall and watching it get
closer and closer, yet doing nothing to turn or brake.
• Our advice is simple. Don’t lose your focus or sense
of urgency now that recovery is in sight.
Let’s now discuss your ideas on how together we can
make that a reality for you and your business.
Curtis A. Feldman, CPA 138
© Shepherd & Goldstein LLP and RANONE June, 2009
139. Conclusion And Closing
Thoughts
• Any questions?
• We would be pleased to assist you in your strategy
development and implementation.
• Please complete the seminar evaluation form before
leaving.
• Leave a business card for our free quarterly email
Grow Your Business newsletter.
Curtis A. Feldman, CPA 139
© Shepherd & Goldstein LLP and RANONE June, 2009
140. Thank You !
~ Curtis A. Feldman, CPA
~ Ed Nunes
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