Tag Archive for 'operating fundamentals'

Focus on the fundamentals for 2011

The beginning of a new year is the perfect time to revisit tried-and-true operating fundamentals that have served businesses well since Og traded skins to Gog for shells.

Regardless of where your business is on the economic recovery time continuum, focusing on these fundamentals, and others, will produce positive results quickly.

1. Declare war on excess inventory. Don’t miss a sale; but don’t let one piece of inventory spend the night in your building unless it’s essential.

2. Review all operational steps, and eliminate or fix inefficient ones. Focus on the pennies; the dollars will take care of themselves.

3. Review all contracts for services received to make sure you still need them. Your customers are doing the same thing, so get ready.

4. Interest rates are still low. Talk with your bankers about adjusting any outstanding notes to the new rates.

5. Keep your bankers informed about how things are going. The title of the shortest book ever written is Loan Officer Courage. An uninformed banker is a scared banker, and no one ever got any help out of a scared banker.

6. Employees spend most of your cash. Have a meeting, and ask them to help you identify ways to maximize margins and cut expenses. Write those things down, and put them into the new budget and your operation. What’s their motivation? How about job security?

7.  If you rent, have a pow-wow with your landlord. Get any concessions you can, and don’t be afraid to be creative. But remember, the more the landlord moves in your direction, the longer the lease commitment will be expected.

8.  Convert non-performing assets to cash, even if you have to short-sell something. 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 performing, cut it loose.

9. Profit is the Queen of business, but cash is King. Tighten up credit terms with customers. Have a meeting with your sales staff to make sure they understand the new policies. Stay close to your accounts receivables – real close.

10. If possible, personally call on every customer soon to have a business visit, not a sales call. Lay out your case for how you will serve them in the coming year, but also reveal what the relationship needs to look like for it to be good for you.  Think partners, not adversaries.

Focus on the fundamentals, and claim your own economic recovery in 2011.

I talked more about focusing on small business fundamentals recently on The Small Business Advocate Show. Take a few minutes to listen and leave your comments.

Focusing on operating fundamentals

More operating fundamentals to focus on

The 2009 Small Business Attitude

Most people who know me will tell you that I exhibit the classic traits of an entrepreneur: pathological optimist, Pollyanna playing the “glad game,” glass half-full, take no prisoners, etc., etc. Perhaps I was born with all of that; but there is something else that I have acquired in my decades in the marketplace, many of them managing a small business, just like yours: Discretion is the better part of valor.

We’re currently in a very challenging economic period. I use the word “challenging” rather than the technical term, “recession,” because the impact of our economic condition is different for each small business. Some are really hurting, and some are doing okay. But every small business owner is justified in being concerned about the next 12 months.

So, it’s my nature to say, “Damn the torpedoes – full speed ahead.” But that’s not the attitude I’m encouraging right now. My advice is to assume what I call “The 2009 Small Business Attitude,” which is when you look in the mirror every morning, stand up straight and say to yourself, “I’m going to win by surviving.”

I’ll let you define what surviving means for your organization. But I believe that those small businesses that are still in business on January 1, 2010, can say they had a good year. If you can do better than that, congratulations.

Frankly, when we look back on 2009, I think we will determine that it wasn’t as bad as we thought it would be. But right now, as we anticipate the next “shoe” to drop – like one or two of the Big 3 auto makers going bankrupt – many organizations, large and small, as well as most consumers, are girding their loins in preparation for a tough year. And that kind of fear in the marketplace is what causes a recession to last a little longer than it should.

If you feel like taking a big risk in 2009, remember that there is a very fine line that separates the opportunity at the leading edge and the cash-eating effects of the bleeding edge. Make sure your capital picture can support a mistake or a surprise.

Recently, on my small business radio program, The Small Business Advocate Show, I talked about some of the operating fundamentals that we must focus on in order to accomplish The Small Business Attitude. I hope you’ll take a few minutes to listen and leave a comment. I’ll see you on the radio and on the Internet.

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