Don’t worry – this column isn’t about resolutions; resolutions are optional.
This is about fundamentals that have served businesses since humans decided to trade with each other instead of taking what we wanted by force.
- Cash is still King. Managing the relationship between accounts payable and accounts receivable is as essential to survival for your business as breathing is to you.
- Declare war on excess inventory. Don’t let one piece of inventory spend a night under your roof unless it’s turning or paid for.
- Convert non-performing assets to cash. What things were worth last year has no bearing on what they’re worth today, and they will be worth less tomorrow. If it’s not being used, cut it loose.
- Employees spend most of your cash. Ask them to identify ways to find efficiencies and maximize margins. Install these into the new year’s budget and operation.
- Review all operational steps and eliminate, or fix, inefficiencies. My friend, Michael Stallard, recommends the four “Ws,” “What works, what doesn’t, what do we stop and what do we continue.”
- Outsourcing is a best practice. Call a planning meeting and ask this question about every task in your operation: “Must this be done in-house?” Everything that does not directly “touch” a customer is a non-core competency and a candidate for outsourcing.
- Keep your banker informed about business opportunities AND challenges. The title of the shortest book ever written is “Loan Officer Courage.” An uninformed banker is a scared banker and you’ll never get help from a scared banker.
- Success burns cash. Prepare a financial projection that anticipates at least 10% growth in sales this year. See how that impacts your cash requirements due to increases in inventory, A/R, etc., and start thinking about how you will fund this growth (see #7, above).
- If you don’t have a banking relationship with an independent community bank, start one this week This is not a banking alternative – it’s a small business financial fundamental.
- Every customer and prospect has expectations that are changing faster than ever before. Keep asking what they want and deliver what they say. Remember, you get to decide what you do; customers decide how you do it.
Focus on the fundamentals, plan for success and grow your small business in 2012.
I talked more about these 10 business fundamentals today on my radio show. Take a few minutes to download or listen now.
Four more 2012 success fundamentals with Jim Blasingame