Running a business

Running your own business is a great privilege that many of us have in this country. When things are going well most would say that there is nothing better! The flexibility factor along with the earnings potential are perks that they would never consider giving up. They would have it no other way. They could not imagine working for someone else. But these observations are quick to come to mind when things are going good, when the economy is strong, or at the very least growing modestly.

But what about today? What are some of the first things that come up when speaking with business owners? How about this quick list....

1. the poor economy
2. lost accounts and lost sales revenues
3. rising costs
4. unpaid bills, bills and more bills
5. letting go employees

Do I need to go on? It is obvious that times like this can test any business owner's skill and resolve. The fun part of the business seems to be a thing of the past. The advantage of flexibility of your work schedule gives way to long hours trying to figure out how to make ends meet. Math skills , like addition and subtraction, become critical components of our daily work schedule.

There is a story that I once hear about the two brothers who saw a great deal where they could buy some water melons and they decided to go into business for themselves. They found a place where they could buy a dozen water melons (wholesale) for $15 a dozen. Better yet they would not have to pay for them until the end of the week. So off the two brothers went finding a good location to sell their water melons. One brother picked up the water melons with his pick up truck while the other brother decided to set up the stand. He made the signs and almost immediately they had customers stopping by the stand. It appears that selling water melons for $1 each was exactly what the public was looking for.

They sold water melons for a week. They could hardly keep up with the crowds. On Friday it came time to pay for the melons that they had bought so the two excited business owners went back home and began to tally up their sales however when it came time to pay the wholesaler's invoice they immediately recognized that they had a problem. They did not have enough money!

Oh, oh! What would they do? Then the solution became clear. One brother looked at the other and said " I have figured out the problem...next week we need to get a bigger truck so we can sell more melons".

The bottom line here if you are a business owner it that you can not discount your way out of a slump in the economy!

Cutting your profits 20, 30 or 40 % when there are no guarantees that you can gain 20, 30 or 40 % in sales revenues make no sense....yet people do it every day! Not only that, but after doing this and when the economy bounces back, and it will...they are amazed that they cannot get those good 'ole healthy margins back! Huh! Of course you can't as you devalued the product that you sold when things were tough!

Tough times call for tough decisions. Bring your business costs in line with your sales. This is not the same as bringing your product selling prices down 20 % because sales are off 20 %!

Once the business begins to return you can add people (and costs) back into your business if you need to. An interesting things comes out of time like this where we manage to find better, more efficient ways to get some things done. We also realize that some things were being done because this is the way things were...not because they were effective.

Make the tough decisions in a timely manner and before you know it you will find yourself back to that state of mind where running your own business is a good thing!