by Stuart Burkow
Copyright
2009, Guerrilla Profits International
http://www.guerrillaprofits.com/NewBook.html
Profits
for many businesses have taken a big hit...
And unfortunately,
some are facing a profit death spiral that brings everything into question --
and throws all traditional business planning into the wastebasket.
Many
business owners keep their business operating at levels beyond what's called for
by circumstances -- often for extended periods of time while they are understaffed
and overextended -- by going into debt and hoping that the profitable business
they've experienced in the past will come back to them (sometimes it will... but,
this time might not be one of them).
After a certain point,
that's not possible -- and a drastic cut in expenses is the only option. And,
if you have to cut to the point where you lose key people who handle essential
functions of your business -- then you're faced with a business that isn't possible
to be run at the same level -- or that can't produce the profits you were getting
previously.
This is a classic example of where strategy...
rather than tactics... can possibly be the best solution. You simply can no longer
continue doing the things you used to do -- since they are one of the reasons
you're in the mess you're in now. It's time to completely re-assess and re-evaluate
everything you do -- and be very clear about where your profits are coming from.
Profits
are what's important... profits are what pays you... profits are the reason for
having a business. Because, without ample profits to comfortably cover your costs
each month (not cashflow or gross receipts) -- with room to spare -- your only
option at some point will be to shut down your operations.
Hopefully
things aren't that dire for you... and never will be... and you can use these
suggestions while your business is comfortably in the black -- to re-examine your
business and further improve your prospects. But, if you're experiencing a profit
crunch... knowing the answers to the following six questions are critically important
to your business's future.
Start by getting Very Clear
Take
out paper and pen to write down your answers... while you ask yourself the following
six essential small business recession survival questions:
1)
"What are my most profitable business activities right now -- that are likely
to remain consistent and keep producing in the current environment?"
(Consider
if, in the best case scenario... doing only the most profitable business... will
that be enough to support you?)
2) "Do these activities
produce enough profit to warrant a business to support them?"
(This
is important... just because you've been in a business or you want to be in a
business... is not enough of a reason for the business to exist.)
3)
"What activities are least profitable -- that I can no longer afford to do?"
(Don't
delude yourself. If an activity produces below average returns on your investment
of time, money, energy, or resources -- dump it. Don't wait.)
4)
"What are my EXACT costs each month -- and what can I do without?"
(You
must know to the penny... no kidding. How can you possibly know what you're aiming
for unless you have your exact monthly target in mind. No guessing allowed.)
5)
"How can I sub-contract and hand off all work that doesn't directly produce
a profit"
(You must overcome the loss of your help
by not consuming your time with administrative tasks such as doing paperwork,
sales tax, accounts receivable, accounts payable, etc. -- that can easily be done
by other professionals and specialists "as needed.") ... And,
6)
"How can I leverage my tangible and intangible assets to profit in different
ways?"
(Here's where you can start to get creative
-- and harness your business in ways you might not have considered before. We'll
go into this a bit more, below.)
-----------------
One
Profitable Business Alternative
First, a couple of observations
about profitable businesses:
Sometimes what seems like good
business because it causes larger amounts of revenue, really turns out to be a
lot of trading dollars once you take a closer look at it. If your employees were
putting out work for you at low margins...then anything less than ideal circumstances
for your business will cause a strain.
Whether you have
employees now or not, you should constantly be looking for ways to upgrade the
work you do to be more profitable business -- preferably ahead of any slowdowns.
Also,
your ability to make a profit in your field is often unrelated to you actually
doing the work yourself or in-house.
Let me explain...
Often
the best resource you have... the main thing that really produces the most profits
for you... is your ability to attract, sell, keep, and re-sell your customers/clients.
The
real profit-generating assets of your business consist of your customer list,
the brand you've built, the reputation you have in the marketplace, the contacts
you have in your field, and your ability to conduct business and sell. None of
this has anything to do with actually doing the work in your business that turns
out the goods or services.
If you have people who are buying
from you -- and who you expect to continue as customers -- what's to stop you
from sub-contracting out the work related to the manufacturing... and setting
yourself up as a broker for the deals with your customers?
You
may even be able to have a friendly competitor take over your "physical assets"
(or otherwise liquidate your support of those operations) -- while you maintain
and keep your ability to conduct business with your clientele.
You
have the knowledge about your business... you have the relationships with your
customers/clients. Give some deep thought to how you can continue to transact
business without supporting the facilities and operations connected with your
business -- and you may be able to discover something that will work better to
produce profits than you might now imagine.
Copyright 2009,
Guerrilla Profits International
