A Company Diet

You may be wondering what I mean by a company diet. Have you ever had the experience of stepping on the scales, then being in shock at your weight gain. It seems as if the pounds came from nowhere, in essence just creeping up on you. However, if you were to take some time to think about what you have been eating, look at your exercise routine, and consider if you are getting adequate sleep, you just might be surprised that your weight gain is really no surprise at all.

A Company Weight Gain

Okay, I know we don’t weigh a company, but actually something goes on in most companies similar to an individual gaining weight. Imagine your company has just been humming merrily along; then one day you suddenly realize profits are beginning to fall. Like weight gain, the whole thing seems to have snuck up on you when you weren’t looking. Here’s a hint – You probably weren’t looking!

Take a Look

Just as you might do when you gained weight and had to review what you were eating, how much you were exercising, and whether you were getting enough sleep, a similar process needs to occur when you notice your business profitability, cash flow, and other key business metrics are on a downward spiral. It time for a company diet plan.

You Are What You Eat

The corollary to eating in your business is what expenses have you begun to assume that really are contributing nothing or little. Like a person who eats junk food and sweets all the time, thus becoming overweight, so to will your company’s expenses become bloated when you are not careful about what expenses you are assuming. Take a close look at what you are spending money on, determine which items are non-essential or not really contributing real value, and then do some serious expense dieting by eliminating many if not all of these items. A little company diet can be very helpful.

Exercise

One of the interesting things about physical exercise is that it frequently reduces cravings for junk food, especially when one considers how much exercise is actually needed just to burn off a 200 calorie candy bar. Similarly, in business, if you have let your expenses get out of hand, it can take a monumental effort to get them under control again. It can make you determined not to let it happen again. But, that is not the end of the story. Practice some company exercise on a regular basis. By this I mean, routinely review and analyze expenditures to eliminate the unnecessary. Evaluate your customer base, product line, and other items using such things as the Pareto principle (better known as the 80/20 rule). Using the 80/20 rule you can see which 20% of your customers are producing generally 80% of your business and likewise, which 20% of your customers are creating 80% of your problems. In addition, carefully review you balance sheet, cash flow statement, personnel, and company structure. There are nearly always opportunities for improvements hidden somewhere in at least one of these areas. Consider this to be your on-going company exercise program.

A Company Version of Sleep

Just like your body requires sleep to process food, recover from exercise, and process new information received during the day, your company requires a similar process. It is good to take a break from the day-to-day grind. Take your vacations and holidays and give you and your employees the time to regroup and be refreshed. (See the previous post Vacations – More Than Fun) You will all benefit from this, as will your company.

Oh, and don’t forget, just like keeping pounds off your body requires a permanent change in your habits, a company diet should be considered an on-going permanent change.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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