In your business cycle, you may need to make tough decisions, including laying off some of your workers. Don’t Wait Too Long! By Gary Shotton #000164
Don’t Wait Too Long
By Gary Shotton
Hello, My name is Gary Shotton and we’re glad that you’re a part of listening to these teachings on Inspiring Better Business and today we’re going to talk about don’t wait too long and it’s referring to the fact that sometimes there’s a cycle in business and I’ve seen over and over again people know that they’re losing money, know that they’re behind their bills are stocking up and they can’t see into the future when it’s got to turn but they wait way too long before they take some significant corrective action you know I’m not a stock market person but I know enough about it that the ability to change buy and sell in the stock market is dependent upon someone’s ability to some kind see where your trends are and if you don’t trend or change or buy or sell quick enough you’ll find yourself on the wrong side of the slope and you’ll be losing money well there’s a little similarity to that in your own business so there’s a business cycle you see almost every business has a business cycle if you’re in the jewelry business I don’t have never owned a jewelry business but I know a few people have and they say that Christmas and Valentine’s Day boy that’s when they’re really business busy I have a friend that owns a heating and air-conditioning company and they say man the worst two months are January in February and the best months are when you are getting ready for summer and the air conditioners all need to be worked on or you’re getting ready for winter and all the heaters need to be worked on there’s a cycle there’s a season there’s something involved and once you’re in business for a while you should be understanding and picking up on that season so when you have a season you don’t want to make a drastic change just because it’s a seasonal change you need to be prepared for that it’s kind of like the aunt that’s an old saying you know the aunt will store up or oh chipmunk they’ll store up for the off see season so that they know they can’t gather food they’ll have a reserve you need to think along that way so your but you’re still at spots and times and I’m going to tell sometimes when I had some major things happen in my business ownership and boy if I didn’t make the change at the right time I’m sunk and so you’ve got to learn when to make the corrective actions or how deep those corrective actions are to be to make sure that your company stays solve and safe.
One of the big problems it seems to be especially in the Christian world. We’re a Christian company and we’re where we got a lot of employees or we got even just a few employees and so we get soft-hearted in the sense that I can’t let this person. I can’t change my overhead we don’t have any real work but I’ve got to go ahead and keep these people on payroll because where are they going to go to work well I don’t know where your responsibility is on that I know this that if the company goes bankrupt are you dig such a deep hole you have a chance of everyone losing their job because you couldn’t pull it out I have experienced some of that from time to time I’m speaking from experience I was too late and too slow in my present previous business life and I almost sunk the ship if you know what I’m saying I almost ran the business into the ground because I didn’t make the corrective action soon enough and so you’ve got to be wise in that now in order to make the corrective steps there’s a foundational truth you need to know your financial numbers you need to be able to know and be able to read your profit and loss sheet you need to be able to understand your cash flow those are the two main things that’s another whole subject on both of those you can search the web site for teachings on on cash flow teachings on profit and loss worksheets and they’re there but in essence you need to know your numbers you cannot just fly by the seat of your pants as we would say if you’re flying an airplane and you don’t have any instrument ratings and you run into a storm or turns dark and you cannot see by visual then you’ve got to look at your instruments and be sure that you’re confident in using those instruments that’s what your financial statements are that’s what you need to know so the one that’s most custom is your profit and loss obviously you record your income on a monthly basis and then you look at your expenses typically in two categories one is your direct expenses you should know what that means its expenses that are directly related to the cost of doing business related to those sales of product and services and then there’s the overhead or our administrative expenses those are the expenses that don’t go away the lights the electric the electric bill the maybe the advertising doesn’t go away because you’ve got to keep your name in or you made a long-term commitment so you’ve got to know your numbers and you’ve got to be able to read those numbers and so here’s what I do.
I’ll give an example and then I’ll tell you what I had to do in the 2009 I look at my numbers on a pretty regular basis I look at my cash flow I look at my profit and loss and I don’t list overly get excited after just one month of really good profit or even one month of loss okay we had a month and we look at the end of the month typically on the 10th or 12th or 15th of the next month so let’s say at the end of June you would look at somewhere July 15th you should have your numbers in and you should know whether you actually made a profit for June you ought to be able to read those and understand it reading it means you know what’s in there so you can see if there’s a mistake or not and you can get those things correct it needs to be accurate you can have a bookkeeper by all means have a bookkeeper but you can’t delegate that that’s a big mistake that you cannot you can delegate bookkeeping but you can’t delegate the responsibility of understanding their financial statements so what I do to be sure that I’m on I look at this current month dialer the last month and then I look at the last three months average together with the software I use it’s very simple I just do a spread of if you’re talking about January February March then that’s the last three months for April and if you whip February March and April then I would be looking in May for those last three months so I’d average those together and really start seeing where we’re headed well now if I have a bad month I’m not getting too excited I’m it raises my attention but when I have a second month in a row that’s losing money I let our entire staff know hey we’ve lost money two months in a row we need to all pull together in this third month it needs to be good because three months in a row you better believe
I’m doing something because I’m not going to cause the company to go bankrupt just because I wasn’t watching where we’re headed and so I would then make the appropriate changes not ruthless not heartless but I have to make the changes no matter what my emotions say because I’ve got to be sure we have a company. There when the cycle turns around and we’re back in business again well this is what happened in 2009 I’m too little long I bought the company I have 41 employees. I bought it in 2006 but 2009 was a bad year and it dropped like crazy like my three biggest customers basically don’t even need me anymore I’m in trouble now I happen to have reserve both cash and finished products but I didn’t tell anybody about that I just focused on the fact that if the way it’s headed I’m going to be bankrupt if we don’t get our expenses down in a line and so I didn’t like it I had tears in my eyes but we brought 41 employees into the office one at a time and explained to them we can’t keep you on our payroll because there’s no work to do these were not my overhead people these were my direct employees. I do feel sorry for them but I can’t lose the company and then sure enough one year later it comes back and we’re just busy as we can be and we’ve been pretty business little cycles in between one of the problems when you wait too long you use up all of your reserve you’ve got your back all against the wall you got every you owe everybody in the country money, you owe your employees you’re almost paid you’re almost bankrupt and then you take action I’m telling you that’s a little too late you can’t get tied up in the emotion well I hope this helps I hope you don’t think I’m a ruthless greedy business owner that all I think is profit no That’s not me I’m thinking of keeping this company solid and sound for years to come and I got to make tough decisions. Thanks for watching I hope you’ll share these with other people. Thank you.
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