Business Health Check-Up
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Keep Your Business Healthy
Take a deep breath, clear your head, relax, and then take stock of what you have. How is your business performing now? Have sales slowed? Do you have enough cash? Is your business ready to face a future where business growth is not the key to success? What is the overall health of you and your business both mentally and financially? (Read Full Article)
The United States and the world economies are in a downward tailspin. This economic downturn despite earlier confusion, misstatements, and missteps is very real and will have a significant impact on your business. It really means that we will be changing how we conduct business and that the old way may not work in the future.
We are at a natural juncture moving from a period of business expansion to contraction. The “business cycle” is a naturally accruing shift between periods of prosperity and periods of decline all of which are not predictable. It has been a long time since we have witnessed this dramatic of a shift; going from apparent growth to an unmistakable decline. The speed of this shift took our breath away. Don’t feel like you should have seen this coming and reacted sooner. NOBODY; saw this coming not even the so called “experts” so don’t blame yourself. There are some who claim to have predicted this contraction believe me they didn’t see it any clearer then you and I.
We are caught in a natural occurrence with many factors beyond our control. This loss of control and forced change can be the most painful aspect of an economic decline. It is my belief that what is needed most when approaching dramatic change is to remain cool; don’t panic or succumb to emotions and look for options and solutions. The reason you started your business is your unique set of skills and the ability to solve problems. Let’s face it; your success rests on your ability to remain cool, calm, and get to the other side. There is another side and it maybe better then what we had.
The place to begin every assessment is to review all of the critical elements of your business. The most important element to your business is your mental outlook. Getting mad finding fault and assessing blame is useful if it motivates you to define the problem with the goal of developing solutions. Let’s begin with defining what you view as the problem and then look at all options.
A problem defined is a problem half solved. When you have arrived at a definition that applies to your business talk it over with a trusted source i.e. accountant, business partner, friend, wife; you can even give me a call. Don’t underestimate the value of verbalizing you concerns and getting someone else’s input. Remember you are gathering information to solve a problem not whining, discussion is healthy. Talking is an important part of maintaining good metal health and is a big part of problem solving.
Next get some rest which is vital to maintaining a healthy mental outlook. I know, your first reaction is “I don’t’ have the time”. Relax; what I’m really referring to is a break from stress. Getting your business on track will take some time requiring a lot of your mental resources. Give yourself some time away from the stress this will restore your ability to think clearly recharging your most important resource. The holiday season can provide opportunities and time to get away; a retailer will have a great opportunity in January after the holidays.
It would be nice if we could afford to go lay on a beach but that may not be practical or feasible; however, just taking an afternoon off here and there is helpful; go to a movie or do something enjoyable this will give you a much needed break. The important point; give yourself permission to relax.
Getting some additional exercise is the last component for increasing durability and restoring sound reasoning. This does not mean that you need to start an iron man regimen simple taking a walk or riding a bike is a great place to start. The important thing is to do something physical for at least 20 minutes per day. Doing these things will help you to develop the mental fortitude needed to move forward.
Your renewed mental outlook is vital to adequately quantify problems and develop possible solutions. You will also need a comprehensive understanding of the financial health of your business. This “Business Health Check-up” starts by looking at past business financial performance, three years at least, as represented in your balance sheet and profit and loss statement. This review will point out the financial resources, both strengths and weaknesses, of your organization providing the basis for measuring present conditions and projecting future performance.
A rested mind, clear financial picture, and defined company strengths and weaknesses eliminate a number of unknowns returning significant control back to you. With more manageable number of variables you are ready to look at solutions. Remember solutions are generally on a continuum and are seldom in black or white but are represented by small changes or shifts. In most cases you will not be deciding between staying in business or to file bankruptcy but you will see small shifts. Identify all possible changes and don’t let emotions restrict the consideration of an option further quantitative analysis will eliminate unreasonable alternatives. The goal is to find as many alternatives as possible, feasibility will come.
Develop realistic financial projections for all of the identified options. This process will automatically eliminate some options and may even uncover new ones, this is the quantitative analysis referred to. Assigning dollars to options using your financial history and sales trends develops realistic assumptions about your future business performance. If for example your past performance indicates sales growth will that trend continue given current economic conditions? How was that growth financed by debt, equity, profit margins? What would be the impact of continued growth, no growth or even a decline? What are the financial implications in receipts and expenses?
At this point you have assigned dollars to all possible solutions allowing you to make realistic guesses, projections, and to develop reasonable answers to your questions and most importantly develop a successful plan that will lead you to the next change in the “Business Cycle”. Don’t underestimate your ability to solve these problems; you may be surprised at your revitalized business and maybe a new and welcome direction.
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Library of Congress Cataloging-in-Publication
Business/News & Views® / by David. W. Weatherholt
ISBN: 978-0-9823041-1-2 (electronic format)
Published in the United States of America through www.waconsult.com
Published in an electronic format by Weatherholt & Associates, LLC
First Trade Publishing: October 2008
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