The front page of the Wall Street Journal on March 3rd has an article “Europe’s Original Sin”. The subtitle of National Leaders ignored Greece’s soaring debt for years leads a discussion of how governments ignored sticking out their balance sheet and coughing about Greece and possibly themselves.
The gentler version on the other countries in the article describes this as Fuzzy Numbers and restatements of prior years.
Some of you are thinking why should you care. After all expectations of politicians are pretty low and government bureaucrats who report to politicians may be lower.
To the extent that this allows politicians to avoid making hard choices on overspending, this also increases the amount of debts they run up and look around someday for you to pay. After all, it appears that someday is getting here sooner than most people thought.
Also how much harder is it to create the economic framework you use for making your business decisions when you are not sure which economic data from the government can be trusted. After all if they only fudge the numbers or cook the books on some indexes, that should mean most of the indexes are truthful. Unless they fudge a little on everything or cook the books on the numbers that are relevant to you. How do you know which ones are accurate and which ones have become Fuzzy?
For those with low opinions of politicians who may be feeling a little proud, think about these two points in closing: 1. When you cook the books even as “little” as they are now admitting they did, you get sued or go to jail. 2. Where are over optimistic assumptions or cutting the corners fudging your books that you have not faced up to?
As I see it (and you may too), the economic downturn is a transformative game changer, whereby the winners (real survivors) will be those business leaders who will pay attention to tomorrow and thoughtfully pursue the golden opportunities that are waiting to be discovered.
Here are 9 paths to CYA that you can follow in order to achieve a head start on making next year a surprisingly great year.
1. Review the 3 best opportunities you could create longer term, and assess in great detail what you need to do to pursue them.
2. Examine the 3 top longer-term risk areas of your business today, and focus on how you will respond when those concerns materialize. Since J P Getty, one of the richest people in the world used this approach, it can benefit you too.
3. Assess your short-term risk tolerance and develop a contingency plan to stop Murphys Law in its tracks -- include as much detail as necessary to establish a clear picture in your mind.
4. Evaluate the 3 most crucial infrastructure issues you will face over the next 2 years (key people or skill set needs, financing, or system and process upgrades).
5. Analyze your staffing levels and determine whether you should staff on a "green field" basis. Ask yourself these questions: "If I were starting a new company, would I hire the same employees I have today? If I were to hire them, would I have them in the positions they are in today?" You may be surprised at your answers!
6. Learn which products are losing money and get rid of them immediately, or raise prices on these products/services.
7. Determine the cost of the risks you do not know, such as potential inventory mismanagement, product defect or service quality problems, and inaccurate or unrealistic financial projection and statements.
8. Ascertain your company 10 top customers not only in revenue but in terms of profitability. Ask yourself what complimentary or add-on products and services you can sell them to balloon your profits.
9. Evaluate and improve the speed and quality of your cash flow and key metrics monitoring in order to prepare for a challenging and choppy, turbulent year.
Bonus Tip: Pull this list out every six months to see how you can better manage company operations and resultant cash flow. Feel free to add notes or comments and change any words to "make it your own". After all, you gain when you internalize information. And in this case, you stand to reap some tangible benefits. Cash!
Note - I originally published this on December 31 on Ezine Artilces and a friend suggested I also post it on my blog, for you.