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It has never been the intention to make this column a political platform, but the "unusually uncertain" or more aptly, "political uncertainty" is crushing our economy.  If the reasons for this uncertainty were simple economics, then business would move on looking for effective ways to address the unknown.  In this case the uncertainly is by design-- creating circumstances where we are competing with "one arm tied behind our back."

By every measure of success, whether economic, legal or social, the United States sets the standard.  Our economic indicators provide facts that prove the validity and measure of this success.  Our system is not broken.  In fact, it is a long way from being broken, but it is staggered by the weight of political uncertainty.  Winston Churchill, who understood turbulent times, said, "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."  In 2008 many were caught off guard with the sudden drop in economic activity, scrambling to stay afloat. We shouldn’t be caught off guard again. Be proactive and convert this difficulty into an opportunity.

Make the most out of this opportunity by taking the time to evaluate and adjust your current business model.  Start by reviewing all expenses-- nothing is sacred-- and trim, trim, trim.  Every penny trimmed is important, but keep in mind that trimming expenses alone will not lead to a better business model.  Trimming 100 percent of expenses is certainly possible but would simply result in closing your doors.  Sometimes this is the best option, but it should not be taken without looking at all available options and preparing to weather this economic storm.  Let’s look for some opportunities.

1. Look hard at bank fees.  If your business has an “analysis account” you may be surprised by the rate increases.  Banks are businesses and need to make a profit, however, sit down with your banker and go over your statement line-by-line, ask questions and evaluate the options.  You may be surprised at services that can be trimmed because they are redundant or not used. 
2. Review telephone and cellular telephone accounts, going over it line-by-line like your bank statement.  You may find redundancies or items that are not used.  Do you use that extra fax line?  Another example: unlimited texting is a great option, but if a minimum number of text messages are actually sent, then it would be cheaper to pay a per text message charge.  Again, trim, trim, trim.
3. Talk to vendors and ask for prompt payment discounts.  Discounting terms were frequently used to enhance cash flow, but usage of this practice has declined.  Don’t be afraid to ask.
4. If you lease space and are locked into a contract that was negotiated at higher rates in better times, then it may be a good time to sit down with your landlord and review the lease terms.  They may be receptive to reasonable accommodations.
5. Compensation is an area that should be reviewed.  Look for creative bonus opportunities that can create a win-win for you and your employees.
6. Review marketing and advertising expenses.  Marketing expenses may look like a prime area for reducing overhead expenses, but remember the reason for this expense category.  Marketing and advertising expenses should be viewed as buying customers.  Measure every expenditure against the results produced (i.e., does it produce customers?)  If it doesn’t, then pare down.  If it does, you may need to do more of a good thing and even increase effective marketing.  Advertising spent on branding is hard to directly trace to new business.  Branding is an effective part of your overall marketing campaign and may be a good reduction area, but don’t eliminate it completely.

Review expenses and trim, trim, trim is a great first step but is only half of the solution.  Look hard at sales and revenue sources and add, add, add. 

1. Cash today is better than cash tomorrow.  This basic finance concept works and can be your incentive to provide discounts to your customers for early payments.  Look for creative ways to reduce your accounts receivable. 
2. Review all product/service categories, applying a simple cost benefit analysis and modify or eliminate product/services that don’t produce adequate benefits. 
3. Be creative and look for new sales channels, getting your products/services to customers, such as using kiosks, the internet, dealers or outside sales efforts.
4. Look for new products/services and business opportunities.  Changing your business model is not bad.  Every business that successfully makes it past their first five years usually has changed significantly from the business that started.  In the beginning of a business, product/service knowledge was your advantage but now that you have demonstrated successes operating a business, look for ways to replicate that success by using your business experience to promote other product/service options.

Paying attention to changes in this economic climate is a good thing as long as it leads to healthy introspection, not fear.  This is article was not written to be an inclusive list of opportunities to review.  Hopefully, it motives you to redirect that fear of the unknown or change using past successes to see the "opportunities in the difficulty."

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

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