Matthew LaWell

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“Over the past 10 years, a lot of clients looked more to their firms as scriveners,” says Neil Ganulin, member, Frost Brown Todd LLC. “They would go out and cut a deal, then call their lawyer, tell them what they had done and ask for a contract to be written. At that point, it can be a little late in the process for a lawyer to be able to point out other things.

“I think it was a missed opportunity for clients.”

You might be in the midst of another missed opportunity right now. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“The recession has caused some companies to completely change the way they do business,” says Nathaniel Lampley Jr., managing partner of the Cincinnati office, Vorys, Sater, Seymour and Pease LLP. “Often, that means they have a heavy reliance on a law firm. The workout lawyers, the bankruptcy lawyers, the reorganization lawyers have been very busy, because some companies are trying to find the correct organic structure because of the pressures that have been laid upon them because of the recession.

“At the same time, there are other companies that have kept the work in-house.”

The amount of work and communication required of some attorneys will also likely increase through 2010 and during the early months of 2011.

“I do think we’re going to see more use of lawyers in some industries, especially the regulated industries — financial institutions, health care, insurance companies,” says Susan Zaunbrecher, partner, chair of the corporate department and chair of the financial institutions practice group, Dinsmore & Shohl LLP. “They are so heavily regulated and the government is regulating them even more stringently today, that I think you’ll definitely see those industries using their lawyers more because they have to.

“As we start to pull out of this recession, you’ll also see some other industries starting to go back to their lawyers and relying on them more for the assistance they used to get.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Cincinnati and Southwest Ohio are expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“There has been an increase in distressed asset transactions in the real estate market and an increase in workouts,” Ganulin says. “So for those clients who are financially sound and have a pretty good cash base or have access to other forms of capital, there have been opportunities for them to acquire some pretty good properties and businesses at a price that wouldn’t have been available four years ago.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“There is a command for us to be more efficient, there is a request that we attempt to be more flexible in our fee schedules, and there is a request for us to be more accessible,” Lampley says. “Clients really want us to add value, and that means doing the same job in a more efficient way.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“It depends on the relationship and the comfort that a business owner, executive and boards of directors have with their legal counsel,” Zaunbrecher says. “I have numerous clients where I talk with the CEO and board of directors regularly. I have others that I hear from maybe once a year, just to check whether there are things we should be doing and things we should know.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any of a number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“If your firm doesn’t know you well, if they’re not responding to your needs, if they’re not able to provide you with sound advice and counsel that adds value to your organization — of course, now is the time to make a change,” Lampley says.

You might also want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

“But if a company has been with a law firm that knows them, knows their business, has been providing services, and is flexible and accessible, I’m not sure that now would be the time to make that change,” Lampley says.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“We have to understand your business, and we can only do that by getting to know you,” Lampley says. “Hopefully, we can establish or continue a relationship that allows us to do that. After we get to know the business, we can tailor our specific skills and services around what’s important to you.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“We have seen a lot of companies that have tried to not use their lawyers as much because they don’t want to incur the fee,” says Susan Zaunbrecher, partner, chair of the corporate department and chair of the financial institutions practice group, Dinsmore & Shohl LLP. “Now, for some businesses, that will be an issue, because at some point, it builds up. “At some point, it would have been less of a problem than it is now.

You might be in the midst of one of those swelling problems at the moment. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“Our relationships have been more related to general corporate counseling, specific to litigation needs, and in the areas of general business and litigation, it has probably experienced a bit of an uptick just because there have been things that needed to be addressed,” says Austin L. Hirsch, partner, Reed Smith. “We are viewed as a business adviser, as opposed to someone who is providing a task, and these are the times when that really counts, these are the times when it really shows whether you have a relationship.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“I do think we’re going to see more use of lawyers in some industries, especially the regulated industries — financial institutions, health care, insurance companies,” Zaunbrecher says. “They are so heavily regulated and the government is regulating them even more stringently today, that I think you’ll definitely see those industries using their lawyers more because they have to.

“As we start to pull out of this recession, you’ll also see some other industries starting to go back to their lawyers and relying on them more for the assistance they used to get.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Chicago is expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“In the last couple of years, there has been less merger and acquisition activity on both sides, for buyers and sellers, particularly in the upper middle market,” Hirsch says. “But certainly, if the economy does pull itself out — and we’re starting to see some of our more successful clients step out because they’ve been more profitable during this time — more businesses will start to think strategically about opportunities in the marketplace.

“If that trend continues, there will be more M&A activity in the course of the next year.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternative fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“There are specific advantages we can discuss in terms of alternatives if the business is sputtering,” Hirsch says. “We can try to give advice to the client about certain renegotiations or techniques they should consider. We can certainly tailor those discussions, depending on the client’s need. It might help them get through whatever challenges are out there.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“I like to use the term ‘staying sticky’ with your clients,” Hirsch says. “I think it is something in which you try to continue to meet with the clients regularly to go over strategy. Now, you have to tailor your relationship. It’s hard to say that every client relationship is the same, but clearly, there are benefits that we can provide by going out to lunch, by going out to a client’s place of business, by sending articles of interest that will stir and stimulate thinking about different tactics or approaches for their business or their customers.”

If you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“Though if there is a good relationship with an attorney or a firm, this would probably not be the right time to switch,” Hirsch says. “The value proposition is really in having that trusted relationship, being able to work through the issues, being able to have business advisers who understand the needs and the culture of a business.”

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“Good communication between the adviser and the principal business owner or managers is very important during these periods,” Hirsch says. “It’s that kind of discussion where you can develop alternatives that you can think about and then act upon.”

Because in a world and an industry filled with so much change during the last couple of years, something needs to stay the same.

Tuesday, 26 October 2010 20:00

Center of attention

There are so many stereotypes about attorneys. Some of them are true, of course, but most of them are not.

Some attorneys are, for instance, sharp dressers, every bit the models for the top designers that you might expect, with perfect hair and a packed brain to match, but not all attorneys look like they belong on the cast of some courtroom drama that moves through its story arc each week in 44 minutes flat.

Some attorneys are fast and slick and out to make a quick dollar — or a quick couple of thousand dollars — but not many.

And, yes, some attorneys are blindingly intelligent and able to rattle off laws, statutes, regulations and court cases long since decided as if it was their job because, well, it is.

Your attorney is not a heart surgeon, a rocket scientist or a neurophysicist. They might as well be, though, to handle the level of work and degree of difficulty required during the last couple of years. After all, you have probably rarely called your attorney for something casual during these strapped economic times. Calls always seem to be reserved for something expensive and stressful that has to be handled correctly.

“We do forget that there are times when the client, in an effort to reduce the time a lawyer needs to spend on a matter — and thereby reduce the cost if the matter is being billed on an hourly basis — will sometimes make judgments that the lawyer doesn’t need to see something or that something isn’t important,” says F. Daniel Balmert, managing partner of the Akron office, Vorys, Sater, Seymour and Pease LLP. “I understand the effort to hold down costs — every business is trying to do that — but it can lead to increased costs if the client’s not careful.

“You can see how it can backfire.”

And if you reserve those calls for only a few occasions or late during the process, you might be in the midst of another missed opportunity right now. A majority of attorneys say this is an opportune time to think, then think again, about your business strategy and to examine the economic landscape, because there are opportunities available right now, even in slower industries, that will not be available for long. If you can afford to, this is the time to move. And if you have a good attorney on your team of advisers — no stereotypes here — you already have about as good an ally as possible to help steer you forward.

Remember the past

The last couple of years have provided you with a new set of challenges. Perhaps you needed to lay off a percentage of your employees, close a branch of your business or just do more every day with an already overworked, if not smaller, staff. Odds are your attorney was with you during many of those moments — because even if you didn’t work more with your attorney in order to save legal fees, you probably called and talked more often.

That is, at least, what many attorneys are saying.

“It varies with the client, and in terms of clients that have in-house counsel, I think they’re trying to do more and more on their own as opposed to referring the work to external counsel,” Balmert says. “I’m not certain that’s going to change.

“It’s a situation that depends on the client and the client’s makeup — it varies with the client, just like a preferred form of communication varies with the client.”

The amount of work and communication required of some attorneys will also likely increase through the rest of 2010 and during the early months of 2011.

“The world is becoming a smaller place as far as business in concerned, with the Internet and globalization, and I see that creating opportunities,” says John K. Krajewski, managing partner, Stark & Knoll Co. LPA. “Companies will continue to be cost-conscious — and they should be, they should make prudent business decisions.”

Until then, the existing bump in bankruptcy, commercial litigation and corporate reorganization — sure signs of an economy that has seen better days, months and years — will likely continue.

And valuations are still historically low — though not as far in the cellar as they were during much of 2009 — which means now is still a good time to examine and consider estate and succession planning. What will your business do after you’re out of the top spot? Who will own the business? Who will be in charge? And were you able to take advantage of a down market to pass it along at a better rate?

There are plenty of other things you should consider with your attorney before the economy starts to bump up a little more.

Look ahead and plan

Did you manage to obtain any sort of credit during the last two years? If so, congratulations. That is quite an accomplishment. If not, no worries, because not many other companies did either. That said, some good news for the coming year is that credit is expected to be more available in 2011 than it has been in several years.

More credit is just one of the major points of interest for attorneys during the next six to 12 months. Because of those increased lines of credit, much of the next year will likely include a focus on mergers and acquisitions. Some attorneys say that M&A activity increased during the first half of 2010 before slowing some during the last four months, but no matter your city or region — and Akron, Canton and the rest of Northeast Ohio are expected to be no different — M&A activity will likely be prevalent by the time the calendar turns.

“The recession has provided a number of opportunities for entrepreneurs to acquire businesses, who are looking to expand in a down market, and that’s providing more legal work for many lawyers,” Balmert says. “Some of our clients are more active and busier than I remember them being.”

Alternative fee structures and arrangements — or at least discussions about them — are also expected to increase in 2011. Some firms have provided them for years as an option, others have added them only during the last couple of years as clients asked for them, but there does seem to be a split between clients who are more open to alternative fee structures and those who hold tight to the hourly rate.

Even if you have no interest in alternate fee structures and will renew your proverbial subscription to the hourly rate, at least starting a conversation with your attorney or legal team about some other option might not be a bad idea, especially with the economy and cash flow still in flux.

“I do believe that most firms are willing to explore alternative billing arrangements these days, and that can lead to cost efficiencies for clients,” Balmert says. “But I don’t think that a desire for a lower legal spend should be the sole driver in making that decision, and certainly not without reviewing with current counsel whether there’s some way to work toward an economic arrangement that makes sense for both the lawyer and the client.”

Ensure your value

How can you be certain that you will receive as much value as possible from your partnership with your attorney? Communication, of course — the seemingly simple center of every conversation and great relationship remains the top priority. If you do not talk regularly with your attorney or if you rarely, if ever, ask questions or send recent documents and forms, you need to communicate more.

Most attorneys say they like to talk with clients at least once per month, just a casual meeting for breakfast, lunch or coffee to sit down and talk about you and your company, especially if they work with you more as an adviser than as an auditor — though every relationship is different.

“We take a more proactive approach, we call and make sure everything is all right, we offer to take them out to breakfast just to chat off the clock and find out what’s going on,” Krajewski says. “And what we’ve found out over the last couple of years is that clients who are using the very large firms are coming to us now and exploring working with us because of things like that.”

And if you are not pleased with the quality or the nature of the relationship you have with your attorney, for any number of reasons, the time to consider a move might be now. Rates are historically low, and this is perhaps the best buyer’s market of any of our lifetimes.

“If you’re unhappy with either the service or the costs, now would be a perfect time to explore, to sit down face to face and meet with an advisory team of qualified and experienced lawyers, and explore what they have to offer, see if there’s a match, see if there’s synergy there, see if it makes sense,” Krajewski says.

You might want to consider a change if you have just outgrown your firm and need a firm with a larger regional, national or international footprint.

You might also consider asking your attorney about any changes in rules and regulations for 2011 and beyond. Asking whether the firm offers any corporate education that you and your employees might be able to put to use would also be a good idea. And asking for a review of your corporate structure, especially for possible inefficiencies, would not be a bad use of time or money. What are your employees earning? What are your executives earning? What else are you paying for? And is it really worth the cost?

“A good law firm ought to be in a position to review and make recommendations concerning whether the client is structured and operated, as a business, in a manner that promotes positive fiscal performance,” Balmert says. “It should be in a position to advise on important legal requirements, and compliance with those requirements, and to inform the client about opportunities that might be available.

“We want to provide the best possible legal product efficiently, promptly and at a fair cost. If a client feels they’re not receiving that, it’s important to communicate any concerns — because whether it has to do with the quality of the product, the promptness of delivery, the price, any of those things, it’s all about communication, it’s all about the relationship. That trust is built on communication.”

Because in a world and an industry filled with so much change during the last couple of years, you always need to talk with your attorney. Something needs to stay the same.

In September 2008, the global economy was on the brink of its historic collapse, about to slip from the precipice to the abyss. In September 2009, the financial challenges posed by that collapse ranked as the overwhelming top risk for businesses, according to several national surveys. And now, in September 2010, well, the inevitable recovery appears to have started and some sense of optimism has seeped back, but the risk that swirled just last year remains — heavy, ominous — for businesses large and small, for businesses like yours.

If you do not have a thorough risk management and business insurance plan in place now, you should start to develop one as soon as possible. After all, recovery or not, there remains a great deal of uncertainty about the economy, and you should pay attention to and manage your risk. If you do not have a relationship with a risk management firm — or at least have an internal executive in charge of that department and those decisions — you need to pick up the phone now.

Because just as the economy has changed, so, too, has risk management.

“Over the last decade, risk management has really been maturing toward an enterprise or strategic approach to identifying, analyzing and managing risks,” says Deborah Luthi, vice president of the board of directors, Risk and Insurance Management Society Inc. “This approach really targets key risks, both insurable and uninsurable business risks, that most directly affect organizational performance.”

Those risks can include things like workers’ compensation, property insurance and general liability.

“The financial meltdown and the economic slowdown have really brought a heightened duty of care, disclosure and discussion regarding risk to the board level of organizations,” Luthi says. “So I think putting a strategic risk management process in place provides a framework for the board to consider risk and reward for balancing profit and risk against accomplishing the organizational mission.”

Plan and move forward

If you do not work with a risk management firm now, the first question is, of course, “Why not?” The second question is something along the lines of, “Do you really need to work with an external firm?”

Especially today, with revenue and profits just inching up — if they are increasing at all — and every dollar a precious commodity, would you really benefit more from bringing in more experts from the outside rather than turning to your own internal experts?

“You can keep this process relatively simple, and organizations that are farther down the road in terms of enterprise or strategic risk management have found that you can sometimes get wound up in the process and not get it linked into the planning,” Luthi says. “The response that we hear most often is, ‘Keep it simple and designed and customized for your organization.’ I don’t think any organization that practices risk management uses a cookie cutter. Everyone needs to customize it to their own organization.”

You might delegate the responsibilities to a team of executive leaders, with your chief financial officer or chief risk officer at the helm. As always, keep in mind that so many of your employees are already strapped for time each day and might be overwhelmed by additional tasks — especially one so important and intrinsic to the future of your business.

If you do work with an external firm, build a relationship with it as you would with any other business adviser. The firm is on or near the same level as your accountant, your attorney and your banker. The longer and more closely you work with the firm, the more your risk management will actually take effect in your business plans.

“What you develop is another critical person on your team who will be able to identify new risks as they come up, who will be able to look at things in their financials that they can change around,” says John A. DeFazio, senior vice president and branch manager, Heffernan Insurance Brokers. “It’s an additional member on the team that will help them operate better.

“There are specific insurance questions you can always ask: What umbrella limits should someone buy? Are you buying employment practices liability? What are you doing when you have a wrongful termination lawsuit? It’s a way of benchmarking so that you can run your business knowing that you’ve got most of your bases covered.”

No matter which route you choose, you will likely want to listen to experts who recommend you chart and graph — yes, graph, just like back in geometry and physics — a framework to use in order to reach your decisions. Chart both insurable and uninsurable risks — your uninsurable is your brand and your reputation — in order to be able to make decisions and define your risks.

“It’s easy to avoid or disregard risk management practices when you’re under siege and losing money and laying people off,” DeFazio says. “But the quality companies are continuing to invest in safety and risk management and the proper analysis of all their exposures to risk. If you want to keep your business operating, you need to establish certain baseline insurance purchasing regardless of the economy.

“There are plenty of ways to save money on insurance, but that doesn’t necessarily mean buying less of it. It just means you’re buying it a little bit differently or maybe you’re choosing a different way to handle a risk rather than buying it.”

Invest and remain active

At many businesses, risk management and business insurance were in that first batch of budget cuts back in late 2008 or early 2009. Everyone needed to cut costs, and a good chunk scaled back on insurance. But the commercial insurance market was soft in 2009 and has become even softer in 2010, making this an ideal time to either jump back in or invest even more.

But money is only one part of the plan to take advantage of your risk management and insurance. Talk with either your internal leader or your external firm and determine where you are and aren’t covered. Many businesses have invested heavily in product recall, privacy coverages, and employee health and benefits during recent months. The only way to keep track of all that is to remain involved on a regular basis.

“It is probably the best time to buy competitively priced insurance in years,” DeFazio says. “So along with the obvious insurance that you’re going to buy — general liability, fire insurance, auto insurance — you should look at some of the more critical but affordable insurances that people don’t buy all the time — directors and officers liability insurance, employment practices liability. One of the biggest ones these days is privacy insurance or cyber liability insurance. Those three insurance coverages are all very affordable and plentiful these days.”

You need to pay more attention to your risks and insurance now than during the best of times, and with the soft market still very much in play, you should probably continue to invest as much, if not more, in protecting your business for the future.

“I think it’s valuable no matter what size the company,” Luthi says. “All companies serve a purpose. They have stakeholders or shareholders; they’re there to provide a service or a product — and organizations often do this intuitively. But there’s something about having a process that facilitates, that documents, that gets this process down on paper or on the computer.”

In September 2008, the global economy was on the brink of its historic collapse, about to slip from the precipice to the abyss. In September 2009, the financial challenges posed by that collapse ranked as the overwhelming top risk for businesses, according to several national surveys. And now, in September 2010, well, the inevitable recovery appears to have started and some sense of optimism has seeped back, but the risk that swirled just last year remains — heavy, ominous — for businesses large and small, for businesses like yours.

If you do not have a thorough risk management and business insurance plan in place now, you should start to develop one as soon as possible. After all, recovery or not, there remains a great deal of uncertainty about the economy, and you should pay attention to and manage your risk. If you do not have a relationship with a risk management firm — or at least have an internal executive in charge of that department and those decisions — you need to pick up the phone now.

Because just as the economy has changed, so, too, has risk management.

“Over the last decade, risk management has really been maturing toward an enterprise or strategic approach to identifying, analyzing and managing risks,” says Deborah Luthi, vice president of the board of directors, Risk and Insurance Management Society Inc. “This approach really targets key risks, both insurable and uninsurable business risks, that most directly affect organizational performance.”

Those risks can include things like workers’ compensation, property insurance and general liability.

“The financial meltdown and the economic slowdown have really brought a heightened duty of care, disclosure and discussion regarding risk to the board level of organizations,” Luthi says. “So I think putting a strategic risk management process in place provides a framework for the board to consider risk and reward for balancing profit and risk against accomplishing the organizational mission.”

Plan and move forward

If you do not work with a risk management firm now, the first question is, of course, “Why not?” The second question is something along the lines of, “Do you really need to work with an external firm?”

Especially today, with revenue and profits just inching up — if they are increasing at all — and every dollar a precious commodity, would you really benefit more from bringing in more experts from the outside rather than turning to your own internal experts?

“You can keep this process relatively simple, and organizations that are farther down the road in terms of enterprise or strategic risk management have found that you can sometimes get wound up in the process and not get it linked into the planning,” Luthi says. “The response that we hear most often is, ‘Keep it simple and designed and customized for your organization.’ I don’t think any organization that practices risk management uses a cookie cutter. Everyone needs to customize it to their own organization.”

You might delegate the responsibilities to a team of executive leaders, with your chief financial officer or chief risk officer at the helm. As always, keep in mind that so many of your employees are already strapped for time each day and might be overwhelmed by additional tasks — especially one so important and intrinsic to the future of your business.

If you do work with an external firm, build a relationship with it as you would with any other business adviser. The firm is on or near the same level as your accountant, your attorney and your banker. The longer and more closely you work with the firm, the more your risk management will actually take effect in your business plans.

“As insurance companies evaluate clients, one of the things they’re looking for is stability within their organization,” says Jim Gloriod, resident managing director, Aon Risk Services. “So the longer you’re with an insurance company, the better a relationship you can build up, [and] when you do have the big claim, if you will, having that relationship there is very helpful in getting resolution to the matters. The other thing that will happen in the long-term relationships is that, when the market does turn hard, you probably won’t see quite the spikes in prices that those companies who have moved around will see. Those are the major benefits.

“You form a relationship, you get to know how to work together, what the expectations are, and you really come down to being able to fulfill each other’s expectations.”

No matter which route you choose, you will likely want to listen to experts who recommend you chart and graph — yes, graph, just like back in geometry and physics — a framework to use in order to reach your decisions. Chart both insurable and uninsurable risks — your uninsurable is your brand and your reputation — in order to be able to make decisions and define your risks.

“It’s a matter of communication,” Gloriod says. “It’s important for the broker and the client to have constant communication, so that expectations are clearly laid out from both sides — so the broker can deliver them and, from the broker’s side, if something has changed with the risk or in the marketplace, they need to communicate that information to the client.”

Invest and remain active

At many businesses, risk management and business insurance were in that first batch of budget cuts back in late 2008 or early 2009. Everyone needed to cut costs, and a good chunk scaled back on insurance. But the commercial insurance market was soft in 2009 and has become even softer in 2010, making this an ideal time to either jump back in or invest even more.

But money is only one part of the plan to take advantage of your risk management and insurance. Talk with either your internal leader or your external firm and determine where you are and aren’t covered. Many businesses have invested heavily in product recall, privacy coverages, and employee health and benefits during recent months. The only way to keep track of all that is to remain involved on a regular basis. That will also afford you the opportunity to perhaps view your risks from a wider perspective — what several industry experts refer to as the enterprise risk management approach — and to consider your options from multiple angles.

“I think the larger organizations started down that path the last three to five years, and I see a lot of smaller and midsize organizations are doing that, as well,” Gloriod says. “They’ve probably always done it, and probably a little bit better than the larger organization because there wasn’t as much to evaluate. But I see the more midsized companies moving to a more formalized process.”

You need to pay more attention to your risks and insurance now than during the best of times, and with the soft market still very much in play, you should probably continue to invest as much, if not more, in protecting your business for the future.

“I think it’s valuable no matter what size the company,” Luthi says. “All companies serve a purpose. They have stakeholders or shareholders; they’re there to provide a service or a product — and organizations often do this intuitively. But there’s something about having a process that facilitates, that documents, that gets this process down on paper or on the computer.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“When we were going through this mess, we had to cut everything down to the bone to survive,” says Mark Birsinger, owner, M.A. Birsinger Co. LLC. “You had to survive in order to be there when the sun came out. And the sun is coming out and the sun is up. My opinion is, if you have made it this far and you’ve still got a good book of business and you’re not in financial straits, you’re going to make it.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. However much it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of negotiating for the best terms — that should move to the top of your priority list.

“You still have to get the best terms,” Birsinger says. “A lot of my clients are hesitant to go and tell that vendor or that supplier, ‘I need this. If you want to keep me as a customer, I need these terms and I need you to do this for me.’ So many small businesses think they do not represent enough of an order for their vendors to go and negotiate — tactfully but aggressively.

“Whether you’re ordering $1,000 or $50,000 worth of stuff, that order represents business for that company, and they are willing to do whatever they can do to not only keep you as a happy customer but, more important, keep you as a customer. A number of my clients think they don’t have the leverage to negotiate better terms.”

That can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets so you aren’t as dependent on single-source customers and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. And you will likely want to consider your risks, especially over the long term.

“You’ve got to know what you do best,” Birsinger says. “You’ve got to know why you’re doing it. And you have to do it the best. I think that’s a question everyone needs to examine. Everything is different. Many of my manufacturers are not manufacturing exactly what they did in ’07 today because everything has kind of changed. You have to look at everything and re-evaluate it, and the best way to do that is a SWOT analysis. Everybody can brag about the successes and the opportunities, but truly the weaknesses and the threats are the value in that analysis.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

“Manufacturers need to hire and retain smarter workers,” DeRocco says. “As you have the intersection of technology and manufacturing in a much more complex global economy, the work force needs to become educated and skilled — what we call a 21st-century, high-performance work force.

“Most of our workers need a secondary education. A high school degree is no longer sufficient. Our reform will actually grade the competencies and skills that manufacturers now require of their employees into high school and community college programs of study. But it is important for manufacturers to also increase the skills of their current work force.”

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“With the crisis in Europe, everybody’s kind of ultrasensitive to issues and to going out to a lending land, if you will,” Birsinger says. “Everybody’s on edge and everybody’s trying to understand the new economy for small business. All the rules have changed. Really, there aren’t a whole lot of rules right now. Everything has kind of changed, everybody wants it a different way, everybody needs it a different way and few are willing to keep inventories like they did before the recession.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“Unlike during other economic downturns and recessions, this seems to be affecting different manufacturers very differently,” says W. Scott Balestrier, tax managing partner, BDO Seidman LLP. “I have clients who are in the manufacturing industry who are doing extremely well. And then I have others who are doing poorly. A lot of it might be related to the downstream issues, like if you’re involved in the housing industry, those manufacturers are doing very poorly. If you’re involved with something that is in the supply chain for automotive, again, you’re probably struggling quite a bit.

“One of the changes that has occurred in the last 12 months is that it’s very difficult to sort of predict how your business is going to do based on the fluctuations in the economy. If there’s been anything, there’s just been more uncertainty introduced into the marketplace.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of revenue generation — that should move to the top of your priority list.

“The focus needs to shift from efficiency and cost to revenue generation,” Balestrier says. “Revenue generation, distribution channels, acquisition opportunities, that’s where the focus needs to be. I’m thinking of my clients and the cuts they’ve made, and there isn’t a lot more to do.

“For the most part, I see my clients starting to focus more on the top-line revenue growth. They’ve done all they can do between net income and cost of goods sold, and it’s really now focused on how do we grow the top-line number.”

It can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. And you will likely want to consider your risks, especially over the long term.

“Everyone has spent a lot of time looking in the rearview mirror the last few years and saying, ‘Jeez, these results are awful; look at how bad it was,’” Balestrier says. “I think it’s time for people to pick their heads up out of the foxhole and start looking forward and say, ‘Where are the opportunities for growth and let’s start to get very aggressive and focused on capturing those.’”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“We’ll continue to see an increase in acquisition activity,” Balestrier says. “You see what happens in the market every day and there are just so many things that are variables. What you do when you’re in a situation like that is you focus on what are your core competencies, you focus on distribution channels and you focus on cash flow.

“You should maintain the cost discipline that has been introduced in the last few years, but you should start to leverage into where you can get the best cash flow answers so you can continue to service your debt and be positioned for those opportunities that come.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“You can’t base it on a two-minute sound bite on CNN,” Balestrier says. “It really has to be based on where is your company positioned in this economy and who are your suppliers, who are your customers and what’s really happening for you specifically. The broad downturn in the market doesn’t affect everyone equally.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

By the time financial markets around the globe started to tumble in October 2008, so much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession, but perhaps no industry was affected more since the turn of the millennium. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, manufacturers often still let go of the most employees.

The cycle was vicious, and it continued month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, but many indicators do point up, however modest, though challenges remain.

“As far as Northern California is concerned, there is a fairly significant concentration of manufacturing jobs in technology and pharmaceuticals,” says Aftab Jamil, partner, Technology and Life Sciences Group, BDO Seidman LLP. “The trend has been, for several years, that jobs and functions have been outsourced. A lot have gone overseas, but many have gone to the neighboring states, as well. That trend has continued the last two or three years as manufacturing jobs have been lost.

“I think Silicon Valley and Northern California are still very much the innovation capital of the world, but in terms of competitive standpoint, there’s a lot to be desired, and the competition has been increasing domestically and internationally.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010, or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, what with banks starting to somewhat relax their requirements. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business, the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company, that should move to the top of your priority list.

“Every business will look to be more competitive and more efficient in production,” Jamil says. “I think the focus should remain on the manufacturing processes and making them as efficient as possible.”

Keep the long term in perspective

Two years ago, few manufacturers were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be and whenever it does become more noticeable, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various departments of federal, state and local government. And you will likely want to consider your risks, especially over the long term.

“From a competitiveness standpoint, we have to make sure that we keep the long-term views in mind because the short term looks very attractive,” Jamil says. “That goes to both the public and the private sector, as well. We might be able to produce something more cheaply elsewhere, but we don’t look at the long-term view and effects.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of U.S. companies is U.S. technology. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for 2011, it will be important to keep any number of questions in mind. What those questions are will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“As the competitiveness increases in other parts of the world, you look at the overall cost when they come back to the U.S. That should very much be a part of the equation. Looking at it from a customer standpoint, what is that customer demanding?” Jamil says.

With all that in mind, you will also need to think about innovation as much as ever. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future,” DeRocco says. “But remember the volatility of this market.”

By the time financial markets around the globe started to tumble in October 2008, much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home, their labor and their experience no longer needed because of more efficient machines and the rise of globalization. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was all gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession. Publishing and newspapers had been on the decline for years, and the domestic automotive industry, technically under the umbrella of general manufacturing, had been in a slide for a generation. But perhaps no industry was affected more since the turn of the millennium than manufacturing. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, millions of workers were laid off from the collective work force, but manufacturers often still let go of the most employees.

The cycle was vicious, and it continued, month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, not yet, but all of the indicators do point up, however modest, rather than down.

“Two years ago, we hit the wall, and as a result, sales volume dropped off,” says Stephen R. Ferrara, partner, regional business line leader, BDO Seidman LLP. “Most of our manufacturing clients have taken a look at their business and said, ‘OK, what do we need to do to improve processes, streamline our head counts and really make our operations as efficient as possible to maximize our potential in a down cycle?’ So I think most of the streamlining and cost cutting has been done, and now these businesses are poised as we come out of this recession to really improve the profitability of their businesses dramatically as we move into 2011.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010 or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing — and plenty of other industries, too.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing during the last couple of years, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, with banks starting to somewhat relax their requirements for the first time in two years. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business. It is the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company — especially in terms of securing your position in the marketplace — that should move to the top of your priority list.

“You need to have a competitive advantage,” Ferrara says. “If you’re just a commodity, it’s going to be tough to compete. You need to have a differentiating factor in the product you’re taking to market. It’s like anything else. If it’s a manufacturer, if it’s a distributor, if it’s a service company, you need to create that differentiating factor. If you’re manufacturing a product that someone can take offshore and do it much more cost effectively, it’s going to be tough for you to compete at that level.

“You have to have a product that is unique enough that it can’t be produced elsewhere. What’s unique about what you’re doing that separates you from the pact?”

Doing so can also help you better position yourself and your company for the continuing changes and the eventual uptick in the economy and the industry.

Keep the long term in perspective

Two years ago, few manufacturers — few companies at all, really — were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various levels and departments of federal, state and local government to help increase business during challenging times. And you will likely want to consider your risks, especially over the long term.

“I don’t think you can ever stop learning,” Ferrara says. “Now there are a lot of companies that, either on their own or after being driven to do it by lenders or private equity owners or someone else, are bringing in consultants to help them with turnaround and restructuring.

“But to be successful, you need to continually be looking to any successful business needs in order to continually be focused on improvement and what you can be doing differently to be successful, grow and evolve. If you become complacent, that’s how you die.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of companies that are owned and operated in the United States is the technology that is developed in the United States. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes, a trend that will only continue. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

How you handle all of that now might be the difference between a quicker return to profitability and increased production, and the far less appealing option of a long struggle back to respectability and some small sense of comfort in the market.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

“I think you’re going to see people continue to be cautious about investing as we move through 2010,” Ferrara says. “They’re going to wait to see some sustainable growth take place moving into 2011, and I really think that, as a result of this recession, you’re going to see businesses continue to be cautious as we move into 2011 and 2012 and going from there.”

Ask questions

As you prepare for the last months of 2010 and the first months of 2011, it will be important to keep any number of questions in mind. Write them down. Type them and print them out. Keep a copy on your desk. Distribute copies to your executive team, perhaps even all of your employees. Just keep them in mind. No matter how well you know your business and your industry, that list of questions will be as important now as it has ever been.

And just what questions should make the list? Well, a lot will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“I think the cost of goods has been driven down,” Ferrara says. “For example, steel prices a few years ago were much higher, and as the economy softened and the demand has gone down, the cost of raw materials has improved. So I think you’re going to see better attention to detail with respect to efficiencies in the manufacturing process as people are working on thinner margins and trying to continue to make money.”

With all of that in mind, you will also need to consider whether your supply chain will be able to respond to the innovative approaches required for future growth and success, which means supply chain capabilities and locations become more important. The demographics of your work force are also important, especially with a generation of baby boomers still on the brink of retirement. And innovation is important, too. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future, but remember the volatility of this market,” DeRocco says. “There’s a constant threat to every business sector and there are some very large factors in play right now that will determine manufacturers’ cost structure for continued operations, so they’re keeping an eye on all of those — public policy, the global impacts around the world, certainly the European financial crisis.

“Every one of those issues has an impact and creates new challenges for manufacturers operating in that environment.”

By the time financial markets around the globe started to tumble in October 2008, so much of the manufacturing industry was already deep in a recession that had stretched across the better part of a decade. Millions of workers had been sent home. Thousands of factories had been shuttered. Whole companies just disappeared. None of it was coming back. It was gone for good.

Manufacturing was not, of course, the only industry hit hard prior to the start of the larger recession, but perhaps no industry was affected more since the turn of the millennium. About a quarter of a million manufacturing jobs were lost over the course of a decade, the large majority of them prior to 2008. As the recession spread from one industry to another, manufacturers often still let go of the most employees.

The cycle was vicious, and it continued month after month.

How is it possible, then, that less than two years after the economy turned, manufacturing is on the rise again? Manufacturing activity increased again in May, according to the Supply Management’s index, the 10th straight month of growth. And even though that growth has started to slow a bit, growth is still growth. Were the 2008 levels just so low that any growth is significant? Or is the sustained increase in manufacturing a sign for the rest of the economy? Nothing is certain, but many indicators do point up, though there are still struggles and shortcomings.

“Outside of our specialty and highly technical manufacturers, who have weathered the storm pretty well, the more general manufacturers haven’t fared so well,” says Jeff Bugenhagen, assurance partner, BDO Seidman LLP. “There have been a lot of layoffs in the industry, there has been the underutilization of plants, and what goes along with that is the less demand there is for the products, which translates into some financial distress.

“The way things are going, it seems that turnaround is taking a lot longer than anyone originally thought.”

Prepare for more change

What was normal two years ago will almost certainly not be normal during the second half of 2010, or even during the first months of 2011. What was normal then, in fact, might never be normal again. Even though it might be a cliché, change really is the new normal in manufacturing.

Among those changes are the new gaps in the supply chains of some larger original equipment manufacturers, the result of smaller companies closing, which might cause delays and problems in receiving supplies in a timely manner. A number of industry experts say the availability of credit will also likely change, what with banks starting to somewhat relax their requirements. But the biggest change might be the addition of manufacturing jobs.

“Manufacturing is now the only business sector that has been adding jobs for five months,” says Emily Stover DeRocco, president, The Manufacturing Institute. “Manufacturers have added 126,000 new jobs.

“But the focus is going to continue to be more on what we call mass customization, as opposed to mass commoditization. This reflects, again, the industry’s response to globalization, which is that U.S. manufacturers, in order to maintain their global leadership, have had to move to a higher quality and a higher value product.”

And that higher quality product will almost certainly lead to more changes in the way manufacturers and so many other companies plan and do business, the ripple effect across industries.

For example, if you have not already reassessed your vision and your plan for your company, that should move to the top of your priority list.

“You need to stay active in your marketplace and make sure you put out the best product you can,” Bugenhagen says. “You need to have the appropriate network distribution, you have to have the right people in place and the right marketing and distribution channels.”

Keep the long term in perspective

Two years ago, few manufacturers were prepared for the recession. But you can prepare for the ascension, however slow and modest it might be and whenever it does become more noticeable, by being smart during these coming months and years.

You might think about diversifying your product lines into other markets, so you aren’t as dependent on single-source customers, and, more generally, diversifying your portfolio. You might also research how to best tap in to loans, grants or tax credits that are available from various departments of federal, state and local government. And you will likely want to consider your risks, especially over the long term.

“It’s critical that what lines a manufacturer has up and running are the most technically advanced equipment they can possibly have in their facilities,” Bugenhagen says. “There’s not the excess cash flow that allows them to reinvest in new and updated equipment — but the newer the technology and the equipment and the process, the more efficiently everything can run and the less it takes labor-intensive involvement in that process. Maintaining your equipment is very important in these times.”

Technology and education, as would be expected, can also play a role in increasing your business. Several experts discussed how the advantage of U.S. companies is U.S. technology. Domestic manufacturers continue to be at the forefront when it comes to utilizing technology in their processes. To ensure that the technology is operated correctly and efficiently, workers should be more educated than they were 40, 20, even 10 years ago, and with so many quality workers still unemployed, there is a deep talent pool from which to hire.

Most important, though, is to do everything with the long term — and that refers to years and decades, not just months and quarters — in mind.

Ask questions

As you prepare for 2011, it will be important to keep any number of questions in mind. What those questions are will depend on your industry, your goals and your financial standing at the moment, but there are some questions that all businesses need to be asking right now. And those are: What is happening in your industry? Is it expanding or contracting? Is your company expanding or contracting? Where do you see your company in 2015? In 2020? Is your company in the right market? Is it in the right position in the market? What are the strengths and expertise that your company has that could be adapted to another market or product line? Where can you turn to think through your situation? Will your company be able to receive a large enough line of credit during the next year? Will you be able to fund your growth? How sustainable are the current demands? And, the great unknown, how will global events affect your company?

“If and when this turns around and business returns to normal conditions and normal growth conditions, do you have the financial wherewithal in place to take advantage of that turnaround?” Bugenhagen says. “What we’re hearing from those private equity and private finance groups is that this is highly overlooked by the owners. Do they have the capital in place to take advantage when things turn around?”

With all of that in mind, you will also need to think about innovation as much as ever. How will you move ideas from the collective mind of your company to the drawing board to the marketplace? Live in the present but remain focused on the future.

“Eyes on the future,” DeRocco says. “But remember the volatility of this market.”