It’s often easier to put a lot of time and effort into planning for the big problems that can afflict a business. What if our network crashes? What if the big storm knocks out our power for a week? What if something happens to you, the CEO? While it may be easier to come up with these more dramatic scenarios that can hurt your organization, there are a number of seemingly smaller snags that can cause big problems for any business that isn’t prepared.
Cash flow
A failure to adequately implement a budget leads to a demand for operating cash. The following are questions to help identify preventive measures to mitigate cash flow problems:
- Is your product or service seasonal? If yes, do you have a plan to generate cash during the slow season?
- Do you offer discounts to encourage early payment of account receivables?
- Are your suppliers allowing you additional time to pay for invoices?
Equipment breakdowns
If you fall behind on a solid maintenance program, you could face problems with your equipment.
- Do you have regularly scheduled maintenance to maintain equipment?
- Did you purchase a maintenance agreement?
- Do you have a record of recurring problems?
- Do you know the estimated life of the equipment?
- Do you have a plan for a temporary exchange while your equipment is out for repair?
Out of stock inventory
This is a problem caused by poor accounting and unprepared procurement personnel. Here are some questions to help avoid this predicament:
- Do you compare your inventory level to your sales?
- Can you obtain your materials and supplies from more than one source?
- How long does it take suppliers to ship your order?
- Do you have a local supplier for your most important materials?
- Do you accept back orders?
- Are suppliers aware of your ordering policy?
- Do you have someone in your office assigned to follow up on outstanding purchases and inventory control?
Sales decrease
It is not unusual for an occasional decline in sales during a business cycle. When your industry is experiencing increased sales with a similar product and yours is at a decline, however, it may be time to examine the interpersonal relationship between your sales personnel and customers.
The decline may be due to customers’ dissatisfaction with your salesperson. Remember that customers see your salesperson as “the company.” Here are some questions to consider:
- Do you provide support for your sales force and offer professional development for sales managers?
- Who trains new managers?
- Do you have plans for outside consultants to conduct an interpersonal skills in-house workshop?
Dwindling repeat business
Repeat customers are essential to sustain a business. Dwindling repeat business is a human problem, not necessarily a product issue. Here are some things to look at to help you understand why numbers are going in the wrong direction:
- Do you have a new manager?
- Did you alter your hours of operation?
- Is your staff treating customers with respect?
- What is your return policy?
John O. Alizor, Ph.D. is the founder and president Leadership Forensics Business Inc., and author of “Leadership: Understanding Theory, Style and Practice.” He can be reached at [email protected] or (562) 628-5570.
