It’s time to review your business plan
Imagine this: two men are in a lifeboat with a hole, and the boat begins to sink into the ocean. One man believes they will die, while the other is bailing out water and figuring out how to plug the hole. Which one are you?
Just because your business might be sinking doesn't mean all is lost. You can rescue your company by simply taking a hard look at the bigger picture and planning for the future.
Begin by tracking your numbers
The first step is to meet with your outsourced accounting team to review your company's books. When things are going well, it's easy to glance over your reports, see which is more significant, revenue or expenses, and then file it. When things are difficult, you need to look at things more carefully.
Reviewing what you can cut, and more importantly, what you can't. If you're running a retail location, you can't stop paying rent without closing the business. By understanding these types of expenses, you'll get a more realistic picture of how much revenue you need to stay afloat. If your revenue is above the cut line, you can survive. If not, you have a problem that needs to be addressed.
Remember to meet with your outsourced accounting team more often. If you've been receiving quarterly reports, ask for monthly or weekly notifications. Things can change quickly, and you might not realize how bad things are until it's too late.
Review your business indicators
Reports from your accounting team are a helpful tool but show you the past rather than the future. You don't need to know what has happened; you need to know what is coming.
Think of concrete things you can analyze to judge how your business is doing.
Are there fewer customers in your store?
Has website traffic dropped?
Are you receiving fewer orders?
These can be the first signs of future revenue falls.
Review related markets as sometimes while one segment is doing poorly, a similar one could be scaling. This can lead to a repositioning strategy which could save your organization. For example, a fine dining restaurant might see a drop in traffic while a family-style restaurant isn't doing as badly. So while an Italian cafe isn't going to start serving hamburgers, it might add some more affordable items to its menu to help increase traffic.
Working closely with your controller and paying careful attention to the business climate is more important now than ever. Anyone can run a successful business. However, it’s your performance during hard times that determines the future of your company.
