Small Business Change of Course

Have you ever reached that point where you realize that what you’ve been doing just isn’t working? Most of us have. This not only happens to individuals but businesses as well. Sometimes a small business change of course is unavoidable.

Some Examples

Look at some better known businesses that have had to change course; Sears, Circuit City, JCPenney, and K-Mart quickly come to mind. Of course, these are large businesses, but the same is true for small businesses. In the case of Sears and JCPenney they experienced changes in the way people buy that began to erode their old model of doing business. In fact, shopping malls in general are undoing pressure to change. Also, remember the Sears catalog? Well, the advent of the internet eventually made that an obsolete method of reaching customers. Unfortunately for Circuit City they were unable to adapt to the changes they confronted and had to close.

Small Business

Looking back over the years that I have consulted for small businesses (mainly in the areas of finance and operations), I can now see a pattern among those that faced significant problems. Chiefly, they all failed to address problems when they were still small and make the necessary business change of course required for remaining competitive and financially viable. For example, on more than one occasion I have seen a company watch its inventory levels grow to the point that excessive financial resources were tied up in it. But, that did not happen overnight. Rather than being diligent about monitoring the health of the company, they got distracted by other things until the financial health had deteriorated to the point of significant pain, even in some cases from which they could not recover. In essence, they avoided addressing issues as they arose and consequently failed to seize opportunities. For some thoughts on this, read 3 Low Cost Sources of Cash – Part 1 and 3 Low Cost Sources of Cash – Part 2 to see how to make the most of some of the resources at hand.

Gradual Change

The point I am trying to make is that all companies, and in particular small businesses, need to keep a diligent watch on the health of the company. For example, monitor inventory levels, accounts receivable, and other key financial areas, along with relationships with banks, customers and vendors.

Just a ship heading toward an outcropping of rocks cannot wait too long to change course, so too a business is wise to make gradual changes rather than waiting for the last minute when it may be too late. I encourage all small business owners and managers to make a business change of course on a gradual basis. It is much easier and eliminates much of the stress of operating a business.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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