When a Business Needs Help
These are tough times. The current economic environment is something most business owners and their advisors have never experienced. We are going to see conditions get even tougher. This is what we are facing:
- Lots of highly leverage businesses and individuals
- More competitive business situations
- Banks are reducing available capital
- A much slower economy
This is when strategic planning is invaluable. We need to engage a longer term focus to ride out the storm. It is critical for businesses to identify the best growth markets and the competitive threats facing our business. Careful consideration must be to given to employing the proper resources and in the right amounts so we can maximize our return on invested capital.
The process of strategic planning and budgeting is when we identify where the business should be going and how it is going to get there. We need to abandon short-term approaches except to be sure we have the necessary cash and resources to survive. In the past, all too many businesses, advisors, and investors where looking for a quick return. It is now time to return to the basics of building shareholder value. This means taking a long-term oriented approach that encompasses all aspects of the business.
My advice to clients and advisors is to take a diagnostic oriented approach to identify problem areas. Look for the low hanging fruit as you assess operational strenghs and limitations. Focus on improvement opportunities both for the short-term and the long haul.
In this environment you need to be reactive to your current situation and focus on improving cash flow. However, while you do this it is critical to be aware of and recognize the long-term elements of value based management so you don’t cut off your nose to spite your face.
By taking a hard nosed diagnosed assessment of the business (yours or your client’s) you can avoid running out of borrowing capacity and possible bank defaults. Action taken now can stop significant deterioration of revenues through lost customers. Treat the economic situation and crisis on a proactive basis for potential opportunities.
Some business owners don’t want to use consultants but engaging someone who understands how to diagnositically analyze a business and implement corrective action can be worth its weight in gold. Business advisors who are skilled in strategic planning and budgeting can mean the difference between surviving or not making it in such turbulent times. It is a good time to take stock of your business and how you are going to move forward. My Building Business Value program offers a good blue print for doing the right things for the right reasons in a tough business climate.