Toolkit for success: Business cycles

Now that you have the tools, you have to use them in good times and bad.

Normally, successful businesses do not start, grow, peak, decline and die like the classic bell-shaped curve. Do you recall your vision when first starting the business? You thought about starting out, growing and continuously prospering. Your thoughts were focused exclusively on the first half of that bell curve. You probably said, "I'll decide what to do when I reach the top of that wave."

Well, welcome to the real world. Most businesses are like personal physical health. Sometimes your business ails, and it's very healthy at other moments. Take, for example, the business that exists in a geographic region that thrives off a tourist industry.

When the tourists come, you make good profits. When they leave, your sales decline. Larger retailers realize 70 percent to 80 percent of their sales between October and December of each year. Manufacturers are susceptible to the economic swings of the larger economy. Many services have the advantage of delivering on a consistent, year-round basis. Then there is the matter of recognizing the need and doing something about communicating with your customers and staff. Which one are you?

You want the following signs to exist in your business, in sickness and in health:

·  All time lines are being met.

·  Selling expenses should be at their highest just before and during your peak sales seasons.

·  Whether or not you have sales seasons, operating expenses should be at consistently the same levels, with only the cost-of-living increase, from one year to the next.

·  Sales, receipts, net profit, net and cumulative cash flow should rise during that same period.

·  The level of cash on hand is not necessarily going to be determined by peak sales seasons. But be certain you have enough cash on hand to meet current debts and any surprises.

·  Be certain you can meet those operating expenses that happen throughout the year, whether or not you are selling.

·  Customers and employees are communicating at all times.

·  Budget yourself accordingly.

Use these simple measuring tools. Know your customers and employees. And these signs of success will be right in front of you in good times and bad.