Published: Friday, 25th January, 2008 12:30
Time 'dangerous for business'
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Time, they say, is a great healer, but for businesses it’s a killer.
UK plc is definitely facing uncertain times – the 'credit crunch’ is on everyone’s lips, the retail sector has had its worst Christmas for years (even market leader M&S has suffered over the last quarter and expects a tough 2008), the housing market is looking shaky, fuel prices are at an all-time high, energy costs are set to increase yet again … I could go on.
But are we heading steadily towards an economic storm (hot on the heels of the US) or will all this prove to be a temporary blip? And while we all anticipate the gathering clouds, how are you preparing your business for the worst?
For many entrepreneurs, the temptation is to weigh up the odds – “it’ll never be as bad as the early 1990s” or “that big order’s bound to turn up” – but the consequences of doing nothing can be catastrophic. Conversely over-reacting has no downside other than a bit of time and effort, leaving you stronger for the next time.
It’s the same if you’re a start-up or a business in trouble. You’ll have a finite amount of cash to invest in getting new customers, perfecting the product and bringing the right people in.
You’ll have lots of information, making it very difficult to see what’s really happening … until you run out of cash. That possibility may seem remote but the trouble is, unless you make them do so, no bells or whistles go off each time you hit a milestone, and most importantly, there doesn’t appear to be any immediate consequence of not hitting them.
And that’s why elapsed time is always much longer than expected for the vast majority of early stage businesses. It’s also why many DIY turnarounds fail because too little is done too late. It’s very easy to be “heads down” on the tasks in hand, forget the important longer term goals and end up a victim of the silent killer – time. So how do you keep your head up and run the business every day as though your life depended on it?
While you’re battening down the hatches for 2008, you’d do well to …
* Monitor cashflow closely by using a daily cashflow forecast for the coming quarter – it’s critical to be totally on top of this precious resource
* Have a clearly communicated plan with real deadlines and milestones
* Bring in people with the financial skills to deliver objective forecast information
* Get a Non-Executive Director – all successful entrepreneurs have them – they help you look far enough ahead whilst avoiding tripping over your feet
* Hold regular Board meetings outside of the business – keep control of how close you are to plan and what needs to be done, by whom to achieve it
* … and those milestones: make them matter – celebrate success, learn from failure and crack on!
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