Every Business Can Run Profitably, Even Now!
I believe almost any business can be sized to run profitably and to pay the small business owner a paycheck, as well as preserving some retained earnings.
How? The operative word is "sized", a feat that a small business owner can and must accomplish...
or shut the business down as it has no purpose running and absorbing valuable assets with no possible return or growth opportunity.
Make it profitable or shut it down.
Downsize.
Make the revenue and profit cover overhead expenses and payroll.
This is a very difficult proposition for many small business owners, as neither side of this proposition is comfortable.
Forcing profitability requires downsizing, reinventing your business (making your business more productive and profitable by adjusting and changing your business equation), and of course, doing the debt workout, a fundamental necessity.
These three exercises must be done, and while challenging, can be tested first with a pencil and paper by doing experimental cash flows, asking what will happen if you reduce payroll, subcontract, import, sell directly to the consumer, wholesale, close stores, market on the internet, form a joint venture, reduce the payroll significantly, eliminate middle managers and put performance objectives on salespeople and all other employees.
It will probably include making decisions that are emotionally charged, like firing long-term employees who may feel like family.
Unfortunately, you must make this difficult decision now or possibly lose the entire business later.
It is hard, but necessary.
For debt workouts, it's the same deal.
We all want to pay all our debts but you made commitments when the economy was expanding and now that it is contracting, you cannot keep your obligations, thus you either change the commitment or risk going out of business.
You have no choice.
With reinvention, it will mean changing how you do business.
Some employees have to go, others have to be hired, a "changing of the guard" so to speak.
A new way that is more profitable, with fewer employees but doing the correct jobs.
Difficult, but necessary.
Yes, any business that is viable at a its core can be made to operate profitably.
Start with a pencil and paper and project the results of your changes.
When you get the right mix of all three strategies-downsizing, reinvention and debt workout -you will have your new, profitable business.
Now, implement the strategies.
I see the following problems with small business owners attempting to accomplish these objectives: 1) Not acting quickly enough and losing money over time while waiting and doing nothing.
2) Not downsizing deeply enough and carry employees too long.
Cut deeper, sooner.
Save the rest.
3) Doing the same thing in the same way, not accepting the changes that are occurring and the response that is necessary.
Do these things and you will not only survive, but you will prosper.
Don't do them and you will perish.
How? The operative word is "sized", a feat that a small business owner can and must accomplish...
or shut the business down as it has no purpose running and absorbing valuable assets with no possible return or growth opportunity.
Make it profitable or shut it down.
Downsize.
Make the revenue and profit cover overhead expenses and payroll.
This is a very difficult proposition for many small business owners, as neither side of this proposition is comfortable.
Forcing profitability requires downsizing, reinventing your business (making your business more productive and profitable by adjusting and changing your business equation), and of course, doing the debt workout, a fundamental necessity.
These three exercises must be done, and while challenging, can be tested first with a pencil and paper by doing experimental cash flows, asking what will happen if you reduce payroll, subcontract, import, sell directly to the consumer, wholesale, close stores, market on the internet, form a joint venture, reduce the payroll significantly, eliminate middle managers and put performance objectives on salespeople and all other employees.
It will probably include making decisions that are emotionally charged, like firing long-term employees who may feel like family.
Unfortunately, you must make this difficult decision now or possibly lose the entire business later.
It is hard, but necessary.
For debt workouts, it's the same deal.
We all want to pay all our debts but you made commitments when the economy was expanding and now that it is contracting, you cannot keep your obligations, thus you either change the commitment or risk going out of business.
You have no choice.
With reinvention, it will mean changing how you do business.
Some employees have to go, others have to be hired, a "changing of the guard" so to speak.
A new way that is more profitable, with fewer employees but doing the correct jobs.
Difficult, but necessary.
Yes, any business that is viable at a its core can be made to operate profitably.
Start with a pencil and paper and project the results of your changes.
When you get the right mix of all three strategies-downsizing, reinvention and debt workout -you will have your new, profitable business.
Now, implement the strategies.
I see the following problems with small business owners attempting to accomplish these objectives: 1) Not acting quickly enough and losing money over time while waiting and doing nothing.
2) Not downsizing deeply enough and carry employees too long.
Cut deeper, sooner.
Save the rest.
3) Doing the same thing in the same way, not accepting the changes that are occurring and the response that is necessary.
Do these things and you will not only survive, but you will prosper.
Don't do them and you will perish.