Business Sphere

With the current financial crisis, global meltdown, inflation or rising prices, high interest rates, foreclosure of homes, energy supply worries, it is about time to review Peter F. Drucker’s prescription for managing in turbulent times.

The world famous management guru Peter F. Drucker  pointed out that in recession times, which he calls turbulent times,  the balance sheet  is more important than the income statement.

Financial strength – meaning liquidity or the ability to have cash, as well as solvency  or more assets than debts-becomes much more important than earnings.

In hard times like these, it is crucial to have enough liquid resources -cash plus other assets that can be easily converted to cash-to keep surviving and going. Austerity and budgeting are necessary.

And in case you have a business, in order for your company not to delude itself into thinking that it is making record profits, it must correct the misinformation inflation creates. You must adjust sales, your prices, inventory, receivables, fixed assets, and earnings for inflation.

Finally, to survive in the hard times, it is basic that you must have a plan, know your weaknesses and strengths, so that you can take advantage of the opportunities in the environment brought about by change.

The turbulent times today is a challenge for us to develop our coping mechanism and ability to survive. It takes more than guts and determination to keep going.

We must have also a deep and quiet faith, coupled with knowledge, skills and attitudes, to take advantage of the hard times, and to turn the crisis into opportunities, for us and for our children.