What fatal flaw is waiting in the wings, ready to destroy your booming business? And what can you do to stop it?
You can have an amazing business, with increasing sales and activity. But just as one weak spot can explode an expanding balloon, one weakness in a booming business can blow up everything. How secure are you against these four business time bombs?
Four Fatal Flaws:
- Cash Flow: Cash IS King. Business can be booming, but if cash is tied up in raw goods, inventory or accounts receivable, disaster is around the corner. You can’t pay your bills with inventory, or raw goods, or receivables. Creditors demand cash. Construct a cash flow projection. Know when cash is coming in, and when payables are due. Manage growth, receivables and inventory and used debt wisely to ensure you have cash flow needs fully covered.
- Avoiding Financials: Do you have financial reports? Are they accurate? Do you read them? Do you understand them? Do you use them? It’s easy to avoid the financial details of business. You may be running your business with almost no financial information, or you may have access to regular, accurate repots, but never get around to analyzing them. Financial reports are like the canaries in the coal mine. They are the early indicators that things may be ready to explode. Get familiar with financial reports. You don’t have to be a CPA, but you do need to know enough to capitalize on opportunities and avoid disaster.
- Wasted Marketing: You can spend everything you have, and more, on marketing, have zero results, and a bankrupted business. A million dollars spent on Girls Scout cookies will make you the proud owner of a garage fully of deliciousness, but a million dollars spent in the wrong marketing plan can leave you with nothing. Target your market to your clients. Track the effectiveness of each marketing initiative. Adjust your marketing strategy to get the best return for your investment.
- Management Overload: Things aren’t going as smoothly as they should. You’re facing a constant battle to put out fires. It’s not a happy time. Things just feel inefficient. There must be a better way, but there’s no time to think about it. Management challenges don’t get better; they get worse. Address inefficiencies and problems before they get out of hand. If you don’t have the bandwidth or are unsure about handling the issues, get help. A stitch in time saves nine, and taking the time to take action can save your business and your sanity.
Fatal flaws can be like stealth bombers – quiet, hidden and deadly. While starting a business can be risky, unmanaged business growth can be catastrophic. You made an investment, and have profits, and all this can be lost through passive neglect. Build your management structure to support your booming business, both as it is and as you envision it. Don’t short-change your future. You have too much to lose.