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The Lock Haven Express featured seven articles to assist small business owners and this last feature offers ways to timely access challenges and address solutions. Early warning signs often signal dangerous swamp waters with the first being a revenue decline.
Perhaps this decline is due to economic conditions beyond one's control. At other times, problems lie within the organization and persist.
A mix of practical and psychological "rules of thumb" can guide business owners through the murky swamp. A Business Diagnostic Review may allow one to grasp the stage of regression.
-- Early Decline. There may be cash shortages to meet obligations along with decreasing assets, thereby reducing working capital. Accounts receivable may age with quarterly losses, customers may complain and financial information is often late.
-- Mid-term Decline. Inventory might increase as revenue decreases, thereby eroding financial margins. Lender advances and unreliable financial information generate vendor payment demands and a need to borrow money with higher interest rates.
-- Late Decline. Profits often decrease and are ignored as attempts to reduce operating costs are explored. A cash crisis often causes lender accounts to be overdrawn as accounts payable increase.
Given the above "signals," the entrepreneur may need to abandon standard operating procedures and explore composition agreements, stretch-outs and loan re-dos. It may be time to seek professional support because typical strategies could sink a canoe in this deep swamp water.
Business owners often experience regret, doubt, blame, fear, shame and a desire to escape so it is crucial to acknowledge those emotions and take corrective action. Some help can be found on shelves in The Stephen Poorman Entrepreneurship, Business, Finance and Banking section on the first floor of The Ross Library.
The seasoned business owner will recognize early warning signs and categorize them as early, mid-term or late in their cycle and "plug their canoe."
Further information regarding stages of decline can be found in "Navigating the Business Swamp," a book available on Amazon.com or by subscribing to The Express, All Access at subscriptions@lockhaven.com.
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Steve Poorman is an Author-Entrepreneur and Consultant, Certified emeritus by the Institute of Management Consultants.