Lately, my design/build business has been about many things, unfortunately for the income side of the ledger, a lot less time is actually being spent designing and building. My business days have been transformed as the economy takes its toll on everyone. What is your new business paradigm? Are you dealing with challenges that monopolize your focus and simultaneously draw you away from your core business’s strength? What do you do when you have done all you can do and still are not getting the results you want?
Reflect on where you are and where you have come from as it relates to your everyday business activities. I was spending time managing managers; now I am managing construction projects in addition to managing the business. What are you doing daily that is different from what you did in the past? Beyond the shift from one set of daily responsibilities to a different set, ask yourself what have you stopped doing that you need to reprioritize and refocus to make your business profitable?
Your next step is to evaluate your current financials. However, one of the more difficult tasks to perform as a business owner is to evaluate where you are financially when you know the conclusion will be a report put in front of you that shows you are operating in the red. If you are in this boat, and you are the captain of your ship, commit to completing the reports.
Start with the basics: Bring your profit and loss statement as well as your balance sheet completely up to date. This means you will need all of your data entered for the first six months of 2011. Step two is to create a cash flow report for the remainder of the year. Step three is to repeat the exercise for each of your businesses. Do you own and manage income property? Are the numbers for the property being reported to you monthly with a tight rein on expenses and tenant income? Does your chart include basic details like lease renewal deadlines? Step four: Complete an overview report that summarizes all your companies and combines the net cash flow of each company into one cash flow report. Your next step is as critical as each of the first four: Add into your reporting your personal cash position and your personal monthly income and expense report.
I suggest you also evaluate your prospect management system. Do you have a system or is it “by the seat of your pants?” Are your leads organized and followed up on consistently? As prospects have become more difficult to close, I know the tendency is to let some of them slip away. Focus on creating and maintaining a system of tracking and following up. Just because it’s harder than ever, does not mean you should be doing it less!
Now it’s time to plan for the future. Whether or not you are operating in the red or the black, the business and personal cash flow reports are equally vital to your financial stability and future. If you are in the red, the reports will help you focus on expenses that can possibly be eliminated or reduced. It will also assist you with prioritizing your daily activities around building income.
Are you focused every day on income opportunities or are you ignoring clearly opportunistic potential because you are distracted by your other set of daily roles that are keeping you from profitability? These are tough decisions that will be made more easily when your reflection and evaluation efforts are current and accurate. If you are in the black, the day you spend reflecting, evaluating and planning will help you build your personal net worth to promote your global goal of a healthy financial retirement.