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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?

In 2008, the United States and the world economies went into a steep downward tailspin.  This economic downturn, despite earlier confusion, misstatements and missteps is very real and had a significant impact on your business.  This sudden shift changed what we considered “business normal”-- signaling that the old way we operated as a business will not work in the future. 

We are approaching another juncture in business operations and while the economy is in a period of business expansion that could change suddenly.  The “business cycle” a naturally accruing shift between periods of prosperity and periods of decline that is seldom predictable.  Just a short time ago, 2008, we witnessed a dramatic  shift, going from apparent growth to an unmistakable decline.  The speed of this shift astounded us.  In 2008, we were all taken by surprise and NOBODY saw that economic drop coming, including the so-called “experts.”  That was then, but now we are moving into similar territory. It is time to prepare for the unexpected and not be caught unaware.  

We are may be entering into another economic downturn, with many factors beyond our control and uncertain.  This loss of control and uncertainty will force change again, which can be the most painful aspect of an economic decline.  The best way to approach any change is to remain cool: do not panic or let your emotions force decisions, but look for options and solutions.  The reason you started your business is your unique set of skills, and the ability to solve problems and your continued success rests on your ability to remain cool, calm and get to the other side.

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. 

1. 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; or you can even give me a call.  Do not underestimate the value of verbalizing your 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.
2. 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 am really referring to is a break from stress.  Getting your business on track will take some time, requiring many 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. 

3. 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, simply 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. 

4. 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.

5. A rested mind, clear financial picture and defined company strengths and weaknesses eliminate a number of unknowns, returning significant control back to you.  Reducing the number of variables enable you to focus on viable solutions.  Remember that solutions are generally on a continuum. They 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 filing bankruptcy, but you will see small shifts.  Identify all possible changes, and do not let emotions restrict the consideration of an option. Further quantitative analysis will eliminate unreasonable alternatives.  Remember the goal is to identify as many alternatives and solutions as possible; feasibility will come. 

6. 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 and 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? 

7. Now assign 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.”  Do not underestimate your ability to solve these problems; you may be surprised at your revitalized business and maybe a new and welcome direction.

Let me know if you have any comments, questions, or suggestions.
Write David W. Weatherholt at david@bnewsviews.com

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