Yard Sales, Uncertain Economic Times, and War with Iraq or Where does your Cash Flow? Michael Collins President’s Column April 2003
My wife shook me awake. "What, what's wrong?" I asked, more asleep than awake. "I'm ready to go," she announced, as she held our baby granddaughter in her arms and my grandson was still sleeping next to me.
"Go? Go where?" I groaned, even as I said it, realizing with dull horror, that it was time for her weekly yard sale shopping foray across the basin—at an hour when I like to make up for the past weeks' loss of sleep. She proceeded to tell me that the alarm company had just called and that the Sheriff had been dispatched. She then instructed me on finding the diaper bag, the baby formula, when to feed the baby, and where to find the children’s clothes.
She further instructed me on how to fry my grandson’s two runny eggs and what kind of yogurt he likes. All of this in less than 10 seconds, she then tells me she’ll be back in 3 or 4 hours. and, she continues ”I am taking my cell phone with me so I can call you to come to pick up anything that will not fit in my car.” As she hands me our granddaughter, I groggily remembered telling her recently and on numerous occasions, that I was not dragging any more stuff to our house.
She thinks that any time I say, "No, I absolutely refuse," it means she should wait 24 hours, and then I'll do it. She also thinks that when I say, "No, I can't do it," it means that I'm right on the verge of doing it. She thinks a lot of things. She also thinks her methods of shopping are the answer to most anticipated economic declines. While this is just one woman’s approach to economic survival in these uncertain times, what can we do, as small business owners, to weather the upcoming economic storm that is being forced upon us?
Try to follow a simple rule -- focus on your business as if it were facing a decline and figure out how to strengthen it. Strengthening can transpire by using both a strategic and tactical approach.
The strategic philosophy is to have your business focus on its competitive advantage. We, as small business owners, have little control over broad economic trends. Our emphasis should be on how to continue to be the best choice for our customers.
According to a recent study by the Bain Consulting Group, the tool most used to help businesses navigate economic turbulence was strategic planning. I believe this translates into two words for a small business: business plan.
Business owners should use a business plan to strategically maintain, and then strengthen their competitive advantage. If the plan explains the business concept, its marketing, costs, and potential cash flow, the owner can take tactical steps, such as controlling costs and recognizing new opportunities. Controlling costs and seeking new opportunities should also be done regardless of the economic conditions. Growth and good economic times, however, can hide a lot of waste. If your business is anything like mine, you often don't think about cutting costs until the good times' end.
The first rule on cutting costs is understanding cash flow. Cash flow refers to the amount of cash you have available to pay your bills, whether it comes from your retained profits, your overdraft, or some other loan facility. Your bills could be the monthly or weekly payroll, supplier invoices or loans, and interest payments on your borrowings. Many small businesses never force themselves to identify which expenses are essential until money becomes tight and the cash stops flowing.
Our businesses would be well advised to keep expenses to a minimum and market themselves aggressively. In so doing, they will leverage the complacency of competitors who stand idly by waiting for the sky to fall. We are relying on our sons and daughters to fight this war with Iraq, and they are relying on us to sustain a healthy business environment and a strong economy to come home to. Let us not disappoint them.
And as my wife was walking out the door, she yelled, “I’m taking that 20-dollar bill you left on the counter?”
Now I know where my Cash Flows.
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