Business Foundations

We have a log cabin on our property that is well over 100 years old. For some time it has had various ailments warranting attention, but they have not recently risen very high on our list of priorities. This past winter was particularly tough on the cabin, forcing repairs much higher on our priority list.

In planning the repairs, we will first crawl under the cabin and insure a solid foundation. It makes little sense to repair the roof if the foundation has issues.

Any business is the same way. There is never any shortage of things calling for our attention, but time and resources are limited so almost by definition, most of those things are low on our priority list.

Recent economic developments have an impact on our business much like the impact on our cabin during developments last winter. It always makes sense to be insuring the integrity of the foundations of our businesses, but in recent months, doing so has become a much higher priority.

Here are some questions to ask and things to do to insure you have sound foundations for your business:

• Why are we in business? In tangible, concrete terms, what is our purpose? Are we attaining that purpose?
• What is our unique definition of success? Are we achieving it? Are we doing all of the things necessary to lead to this success?
• What is it that we can do better than anyone else? Are we constantly working to make sure we retain or even improve that advantage? Are we fully capitalizing on that advantage?
• Do we truly understand the sources of our revenue streams? Do we understand the nuances of the ebbs and flows of those revenues? Do we understand and control to the degree reasonable the forces that drive revenues?
• Do we have a solid relationship with our key customers? Are we, on a daily basis, making it more or less difficult for our customers to do without us? Are we giving them an excuse to stop doing business with us, or are we giving them new and compelling reasons to make our relationship even more solid?
• Do we understand the cost components of our business? Do we understand the costs that are mandatory to just make it by, and the costs that are wise when they are affordable? Are we investing in the mandatory items first and the elective costs in order of financial priority?
• Are we meeting our mandatory needs in the most cost effective manner? Are there “out-of-the-box” alternatives for meeting those needs that I should consider?
• Have we designed in flexibility and responsiveness to our business model so that we can respond to both problems and opportunities when they arise?
• Do we have strategic relationships with our suppliers? Do they understand our business and the needs we need them to fill? Are we treating them in the manner we want our customers to treat us?
• Have we charted out the inflows and outflows of cash in our business? Have we determined our times of surplus and our times of shortages? Have we made proper arrangements to accommodate any times of shortages? Have we updated these since the credit crisis? Do we have contingencies? Have we looked long and hard at ways to improve cash flow?
• Do I have resources, internally or externally, that I can go to for help and advice when the changes and challenges necessitate additional expertise?
• Is our team on board on all of this? Do they understand our direction, our aspirations, our challenges? Do they know what is expected of them to contribute to our success, especially if those expectations are different as a result of economic changes?
• On a more grand scale, are we part of the problem or part of the solution?