You’re on the high seas on the way to deliver a valuable cargo. Suddenly you get word from below that the ship has developed a leak that unless stopped could, over time, cause the ship to sink. What’s the most effective first reaction? Plug the leak? Find the source or cause? Protect your valuable cargo?
Or perhaps in your exuberance to maximize your profits you’ve taken on more weight than the ship can manage. It’s riding so low in the water that eventually it will be pulled down below the surface.
Of course, it could also be an undetected iceberg.
As captain of your business (your ship) you may be faced with similar situations.
A System Leak?
A business leak might be an employee skimming from revenue. I once had a client whose bookkeeper loved to gamble and would “borrow” money from the incoming cash, and of course, never pay it back. These kinds of leaks are insidious in that it’s often hard to even know there is a leak until things become bad. The business owner needs to have systems in place that match products and/or services provided to expected income. Yet, many small businesses do not.
Too Much Weight?
An overweight business has more expenses than income. It’s easy to forget that often the money doesn’t come in until well after the expense must be paid. If not corrected early, the business will find itself sinking deeper and deeper each month. At some point it’s too late. This business ship can be saved by preparing a monthly budget, observing expenses and income on at least a monthly basis. Considering the long term effect, it’s imperative that expenses must be brought down until the income can match them. Additional capital funding sources may be a short term answer, but eventually it has to be paid back.
An Unexpected Hit?
Then there’s the big lucrative client who had been buying from you for years. Suddenly, there’s a better mouse trap somewhere else and they are gone. Of course, you can try to get them back, but meanwhile the expenses go on. Having a strategy for dealing with the unexpected will help you get to the issue immediately.
These situations deal with systems, budgeting and crisis management. Every business at some point will likely experience similar situations. The answer to all of them is the same: having a solid business management system. That means having time-specific measurable goals, a clear plan of action, consistent monitoring and decision-making based on results.
Now, don’t panic. This stuff is not hard to do. It’s just a matter of learning the techniques and tactics to run your business proactively rather than reactively. I’ve packaged a new six-month semester course called Captains School, which covers the gamut of what it means to function as captain. It provides the training, tools and support to give you the confidence to consistently make sound business decisions.
Aren’t you tired of bailing water?
Don’t wait until it’s too late. If you’re getting that “sinking” feeling, send me a note and I’ll be in touch to schedule a phone call.