Imagine you are watching a movie. Two men are in a lifeboat that has a hole in it and is slowly sinking into a school of sharks. One man is screaming, “We’re going to die.” The other is bailing water and fending off sharks with the oar. Which one are you?
Just because your business is sinking in these troubled economic waters doesn’t mean all is lost. You can rescue your company but only by taking a hard look at the financial picture and planning for the future.
Track the Numbers
One of the first steps is to get together with your accounting services and look at the company’s books. When things are going well it’s easy to run a casual eye over a report, see revenue is greater than expenses, and file it. When times are tough, you have to look at things more carefully.
Look at what you can cut and, more importantly, what you can’t. If you are running a store, you can’t give up paying rent without closing the business. By finding these kinds of expenses you get a realistic picture of how much revenue you have to make to stay afloat. If your revenue is above this number, you can survive even if you have to make some painful cuts. If it’s below, you have a problem.
Consult with accounting services more often. If you’ve been getting quarterly reports, start getting them monthly or even weekly. Things change quickly and you might not realize how bad things are until it’s too late to do anything about them.
Look At Business Indicators
The reports from your accounting services are a useful tool but too often they are showing you the past rather than the future. You don’t need to know what’s already happened. You need to know what’s coming.
Think of less concrete things you can analyze to judge how your business is doing. Are there fewer customers in your store? Has traffic at your website dropped? Are your sales reps fielding fewer calls? These can be the first signs of future revenue falls.
Explore related markets. Sometimes one market segment might be doing poorly while a similar one is doing well or even growing and this can lead to a repositioning strategy that could save your organization. A fine restaurant might see a drop in customer traffic while less expensive family establishment isn’t doing so badly. While an exclusive French bistro isn’t going to start offering hamburgers and soda pop, it might add some budget-conscious choices to its menu to maintain customer traffic.
Working closely with accounting services and paying careful attention to the business climate is more important now than ever. Anyone can run a business during a boom. It’s your performance during hard times that determines the future of your company.
