A recession had many key indicators but the most common that would appear to affect businesses the most were reduced sales, the associated price pressure and the inevitable over-capacity that businesses had within their own business structures.
Almost every adviser speaking about dealing with the recession cited managing cashflow and working capital as the key, he said.
The catchphrase "cash is king" was bandied about.
"Although this is undoubtedly critical, it is a deeper understanding of your business that will lead to you being able to manage your cash and your working capital in a more effective way."
Business owners needed to understand the impact of inventory days, debtor's days and payable days on their cashflow.
"If you proactively reduce the amount of stock that you hold and bring forward the timeframe for which your debtors are paying you, what would be the net impact on your overdraft on an ongoing basis? This could be the difference between being `bankable' or not."
One of the traps businesses often fell into during tough times was that they chased sales - a natural reaction, Mr Mason said.
However, not all sales were created equal.
There inevitably was some trade-off between reducing inventory to free up cashflow and ensuring that the quality of the sale was solid.
Businesses often did not understand the true cost of an average sale that was not paid for.
If an average sale was $1000 and the average margin was 10%, and a $2000 debt went bad, it took 18 further sales to get back to where you started, he said.
"This spiral effect puts you under immense pressure, at a time that you are already feeling the pinch.
"So, at a time where common sense tells us that we should knuckle down and focus on sales volumes, there is a solid case to take a step back and re-examine what we actually know about our businesses and the key drivers to it."
New Zealand businesses were often good at what they did but that did not mean they made good business decisions.
"You could be the best mechanic in the world but you could still make bad business decisions. Professional advisers won't tell you how to fix your car but they will help you make business decisions."
Businesses also needed to focus on their core business, Mr Mason said.
They needed to find which products produced the most amount of profit.
Often, analysis showed that 80% of the profit came from 20% of sales, 20% or products or 20% of customers.
A genuine focus on the margin and return, not turnover, was critical to generating free cashflow with a lower risk profile.
"We need to take the step back and segment our business into its divisions, products and customers and analyse by revenue margin and return on investment.
"It is our experience that when we go through this process, in good times and bad, quite often we find that businesses are spending a huge amount of effort and capital on very low margin contributors."
In the case of a bakery, it could be producing 23 products daily, but not all of them were profitable.
The added cost of cleaning the machines each time a new product was made also added to overheads.
By reducing the range to 14 profitable products, the margin increased, Mr Mason said.
Some businesses took the easy route of "desperate discounting" to achieve turnover as they chased the more risky sales.
A review of pricing strategy was an important thing to undertake but understanding the "real drivers" of a business should produce a better result than a purely reactionary approach to the recession, he said.
