My first blog on this subject (Business Turnaround) discussed why successful business turnarounds are so difficult. My second blog on this subject (Turnaround – Elements for Success – Action One) discussed action 1 “avoiding cash surprises”. The next blog article (How to Achieve a Successful Business Turnaround) discussed action 2 “using financial information to proactively run the business”. This final blog article in this “Turnaround” series discusses the benefits of using budgeting and forecasting. Continue reading
My first blog on this subject (Business Turnaround) discussed why successful business turnarounds are so difficult. My second blog on this subject (Turnaround – Elements for Success – Action One) discussed avoiding cash surprises. I will discuss the second element of success in this blog; using financial information to proactively run the business.
Too many small businesses only use financial information for what I call statutory accounting. That is accounting information is only used to collect receivables, pay employees, pay vendors, pay taxes, and pay the bank. Financial statements are prepared primarily to keep the banker “happy”.
Financial information is not being used Continue reading
As discussed in my previous blog, business turnarounds are not easy to achieve but can be accomplished by taking the proper steps and actions. Surprisingly these actions are also those used by owners of healthy companies to run their businesses well.
There are three primary elements for success in a business turnaround. Continue reading
Why is a business turnaround so difficult to accomplish?
First it is necessary that the Business Owner / CEO acknowledge that a successful turnaround is critical to long term survival of the company. Without this step a successful turnaround cannot be accomplished because it usually takes tough actions to achieve a successful turnaround. A turnaround can only be achieved by being top down driven; it cannot be driven from bottom up.
Secondly it takes different actions to accomplish the turnaround Continue reading
In my last blog I discussed how cash is the lubricant of business and how much stress cash can create. A key tool every small business should be using to prevent cash surprises (and for cash management) is the 13 week rolling cash forecast. This simple tool will help the business owner sleep better at night. (There are other tools used for cash management but I am only focusing on the short-term cash forecast in this article.) Thirteen weeks are used because it is a rolling quarter and provides a long enough time frame to be able to proactively act upon upcoming cash demands. This tool also helps to bring many other aspects of the business into focus including sales, collections, spending, etc. It does not take very long to create this tool but it will provide tremendous benefits for the small business owner in managing the business. Continue reading
One of my favorite expressions is – Cash is the lubricant of business. A good analogy is an automobile. Without good lubrication the vehicle will not run well, if at all. An engine cannot run very long if it is out of oil. A vehicle will not travel well if the wheel bearings are not properly greased. Continue reading