Great Questions to ask yourself -- March 2009

Take Control – of your business success
“A series of simple yet effective ways for your business to succeed in challenging times”

Do you know how well you’re really doing?

These are interesting times, no doubt, for business owners and leaders. If we’re going to succeed, we need to build on our strengths and address our weaknesses. And the financial information you need to start analyzing this has recently been updated. Did you know that?

You’ve just had a business tax return prepared, we can assume. Maybe you’ve done it yourself. Hopefully, you used a professional, and your business records are nicely separated from your family finances. So you’ve had to get your financial records up to date. Look them over. If possible, involve your CPA, your banker, your business consultant, or any knowledgeable friend. Compare last year with the last couple of years.

And answer these questions.
• Are sales up or down from last year? By how much?
• How much of your business came from repeat buyers? New customers? Is this good?
• How did your top 10 customers from 2008 do during 2009? Did you lose any? Why?
• Which product lines did the best? Which services grew? Are you promoting them in 2009?
• Are revenues spread evenly across the year, or is there more seasonality than you’d like? Is it getting better or worse?
• Did costs increase or decrease, when looked at as a percentage of sales?
• What can be done to decrease costs without sacrificing quality?
• Did your expenses increase or decrease, as a total, and as a percentage of sales?
• What are the 5 largest expense items on your income statement? What are you doing to keep them under control?
• Payroll is probably in the top 5. Are you waiting too long to ‘right-size’ ? Can people be protected by converting some fulltime people to part time? Do you have the right people? It’s a good time to add quality skills if you can afford it.
• Are accounts receivable being collected as quickly as you’d like? What are you doing ?
• Are accounts payable stacking up because of a lack of cash? Can your banker help?
• Did inventories grow or shrink? Are you sure?
• Is the business generating cash?

The exercise of looking for these answers will tell you a lot about where you’re strong and where you need to spend some time. If its hard to get answers, you may not be really taking control of your business. If you haven’t set up your accounting systems to be able to answer these questions, talk to your bookkeeper. This is important stuff! Maybe you use QuickBooks or NetSuite. Maybe an Excel spreadsheet. Maybe simply a checking account. It’s not too late to make sure that 2009 is the year you start get the information you need to be a better business executive.

Next month, we’ll look at what you can do with this information and how it can lead you through 2009 and beyond.

Barry Neagle
President, Neagle & Associates, Ltd.
bneagle@gmail.com