What to expect in 2009

How organizations respond to evolving economic, market, and competitive conditions over the next 12 months will influence their ability to thrive. Following are some key trends that AMS is advising its clients to anticipate.

Oil and related energy prices will increase over the long term. Just as $150 a barrel oil was unsustainably high, oil priced under $40 a barrel is unsustainably low. Acting as if energy prices are high, by conserving and adjusting consumption patterns, will pay off.

Markets will continue to be under strain. Customers and clients will face the same pressures you do, and will be looking for solutions. Check in with them to get a sense of what their near-term plans are. Your professional service providers — banker, lawyer, and accountant—can tell you how others are responding to current conditions. This will give you a better handle on the environment and perhaps confirm ideas for investments you’ve been considering.

Customers will reward better than average service. Mindful of their need to watch expenses, and tired of surcharges, add-ons, and other fine print that ends up costing them more for what they thought they already paid for, customers and clients will respond warmly to vendors and service providers who deliver as promised and then some. Going the extra mile will strengthen and preserve customer relationships.

Business confidence will start to rebound slowly. The timing, of course, will vary by industry and market. The federal stimulus plan, whatever its final form, will slowly start to take effect. Close management of expenses will continue to be important, but it will also be important to be ready to move quickly as markets start to open again.

Self determination will drive success. Accurate cash flow forecasting and good internal controls will be more important than ever. Determine if you have too many controls, or perhaps too few? Know which are key and which are in place because “that’s the way we’ve always done it.”

Efficient organizations will be the winners. A good way to improve efficiency is by streamlining accounting processes. For example, you might not need a hard close every month. If it takes you more than 10 business days to close, it may mean your processes and systems may need adjusting. The biggest risk associated with a long close is not getting key financial information to decision makers when it’s needed.

Healthcare costs will continue to rise. This will be reflected in higher insurance premiums. One of the best steps organizations can take is to institute a wellness program aimed at helping to keep employees fit. Such programs typically include nutrition education and group exercise.

Innovation will continue to be rewarded. As other organizations, including your competitors, pull back, think about introducing new products and services. The new business may grow slower than normal, but you’ll get the advantage of coming down the learning curve sooner.

Niche businesses will grow. A direct offshoot of continuous innovation will be the development of more niche businesses, particularly those that focus on addressing problems within larger systems, such as in healthcare, energy, retirement, education, and financial services.

Organizations will look to make staff a variable cost. With organizations imposing hiring freezes or downsizing, many will need still new people if only to replace unexpected departures of key personnel or to move ahead on new initiatives. They will shift personnel from a fixed to a variable cost by increasingly replacing full-time employees with interim workers or consultants.

For more, email Robert Angell , AMS Managing Director, Business Solutions, or call him at 781-419-9230.

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