Difficult economic circumstances bring weaknesses into sharp focus. Poor business planning leaves the charity unprepared for the downturn. If planning is not strong, the quality of the charity's proposition to its lenders is weak and perception of risk increases. When risk increases, lenders may price more aggressively and ultimately the charity ends up paying inappropriate financing charges. Additionally, through poor business planning, a charity's finances or projects can end up badly structured, storing up future problems.
 
A few simple steps can make a tremendous difference in preparing for challenging times ahead:

• If concerned about viability, trustees and management need to seek professional advice early, ideally from a charity turnaround specialist.
• Revisit plans and forecasts, covering the short term cash positions but also medium to longer term objectives.
• When assessing forecasts both of expansion plans, and more 'challenged' times, undertake risk sensitivity analysis so that you understand the 'what if' scenarios.
• When entering into new ventures, consider your escape routes should the project not go to plan. Whilst never planning for failure, any prudent organisation needs to understand its exit strategies. 
• Don't forget there are opportunities out there. The charity may feel it needs to batten down its hatches but don't retreat to the extent that new opportunities to further your objectives are missed.
• Trustees need to be aware of their obligations, whether facing trouble or opportunity:  understand the decision needed, ensure you have adequate information, consider stakeholders and draw a logical conclusion.  Above all, record not only what but why.

Decisions and forward management must be based on sound financial and business plans. Sound information and analysis is vital to understanding trends and opportunities.  Robust and accurate forecasts help management maintain credibility whilst managing expectations of trustees and other stakeholders and enable the charity to manage its cash flow more effectively: often a scarce or expensive resource in difficult times.