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With the New Year approaching, we always think of it as a New Beginning.  What does 2010 hold in store for your business?   Was 2009 a year of hardships or was it just a year like many others, with successes and struggles and changing plans. 

Big Ideas for The New Year should begin with a Plan.  Strategic Planning is a necessity for any business and should include Dreaming** Outside the Box.  What would your business look like if money or manpower was not an object?  Once you can see it you can then determine what it takes to make it happen.  Planning your Work and working your Plan is the most effective way to accomplish any task.  Once the plan is conceived it can then be shared and others can catch the Spirit.  Every business needs a One Year Plan and a Long Range Plan. 

Is your business in need of a Turn Around?  Is this just a turnaround in profit margins or personnel issues?  Or could it be you have heard the words Bankruptcy mentioned yet do not feel that is an option you desire to consider?  There are others ways to “skin a cat” so by all means, talk to professionals that will consider differing alternatives to whatever may be your current need.     A Business Turn Around can provide for many more years of growth and profits but will take time, determination and integrity.  It is certainly worth exploring the options.

Plans to End the Year

Timing strategies are always the Number One Year End item as they land on the Balance Sheet to stay with a business throughout its lifetime:

        Think ahead as to what you would like your year-end numbers to represent?

                        Can you speed up collections to have cash at year-end or pay down 
                        debts?

                        Maybe you need to increase your EBIDA to stay within Bank                
                        Covenants or to apply for a loan in 2010.  

Do you need to make additional asset purchases to be eligible for increased tax savings?  

Do you need to close that deal so you can move out some inventory and increase year-end Receivables?   

If you are on a cash basis, do you need to pay some expenses to reduce your income and thus reduce your income tax debt?

If you need to take a distribution from company earnings or an early distribution from a retirement account, consider the tax implications.  It may be that you should take some in 2009 and wait until early 2010 to take the remainder.  You may need to wait until 2010 entirely, depending on your current level of income. 

…..       Federal and state income taxes are considered paid timely if all have been paid no later than 12/31/2009 through W2 earnings.    This allows for large amounts of tax dollars to be paid at one time yet still be considered paid on time.  This is only for those paying through W2 earnings.  For workers that have only 1099 income, quarterly estimated payments are considered timely if paid throughout

            the year.   If there are large variances in earnings, these calculations can be adjusted and prorated by schedule.  Talk to an expert for more details. 

Planning can improve your Future!

**John C. Maxwell;  Put Your Dream to the Test – 10 Questions to Help You See It and Seize It;  Thomas Nelson, Inc. 2009

Once a budget for revenue and expenses for the year is established (see last month blog, Flexibility-The Key to Sound Budgeting), I strongly recommend that you continue on and also budget for balance sheet items.  To be honest, there was a time in my career that I viewed trying to budget assets and liabilities as a tremendous waste of time, and if the budget was stagnant and we missed our sales targets, it was!  However, using flexible budgeting, you can build a budgeting model that ties the income statement and balance sheet.  Even if you miss the sales target, you can still link assets and liability to revenue and expense accounts.

My favorite software for developing a budget model is MS-Excel®.  Put all active asset and liability accounts into your model.  It is important that all your revenue and expense accounts be linked to some account on the balance sheet.  As an example, if you typically sell on open account with 30 days turnover, you must link to net revenue to accounts receivable.  If you manufacture a product, you will need to build the purchasing and production cycle into your model.  Materials will need to flow from raw inventory to work-in-process and through finished goods. 

This process also provides the ability to create a detailed capital budget that includes the timing for your purchases.  You can also tie depreciation expenses to accumulated depreciation.  I’ve found that the process works best if you have separate lines for the beginning balance, debits to the accounts and credits to the account.  When transactions are complex, you can add a line for each level of detail.  Total the beginning balance, debits, and credits (credits should be negative numbers) together for the ending balance.  Using the ”sumif” function makes calculating totals for balance sheet information easy.

Why is this useful?  Imagine that you sell a product through a commissioned sales force that is paid 5% commission.  By tying the commission expense to the accrued commission liability account, you can watch the liability go up with additional sales or fall on lower sales.  That is the beauty of this process.  Not only does this account reflect what happens in a “what-if” manner, but done properly, all accounts move up or down in relation to activity within the organization.  Taken as a whole, companies can anticipate the future movement of asset and liability accounts based on reasonable assumptions.    In total then, cash needs can be forecast.  Anticipating future cash movement goes a long way toward managing cash and making sure your organization has the cash necessary to grow and be successful.

Using this information allows you to forecast the balance sheet by month.  Once a forecasted balance sheet is in place, you can have your internal accounting personnel generate a formal projected statement of cash flows by month.  This becomes particularly useful when you want to know the effect of reducing accounts receivable days outstanding or the effect of increasing inventory turns by a full turn annually.   The changes created by these improvements become very visible and often this visibility helps drive organizations to realize these benefits.

If all this sounds like a process that would really help your company but you don’t know who or how to go about developing, our partners at B2B CFO® are experts at putting together business models.  Our experience makes the process much easier for clients and provides a sound business tool that helps companies understand the effect of incremental changes on the business.  Feel free to contact us.

All business owners can expect to exit at some point.  You should begin to lay the groundwork for such a transaction long before the actual sale.  Proper planning and execution at each stage will lead to clearer objectives, higher value and fewer obstacles at settlement

Some best practices and considerations in planning your exit:

Strategy - Determine the key factors that might impact the execution of the sale transaction.  Answer the following questions, among others:

• What is the structure you prefer for the transaction - 100% sale or a fraction of the shares?
• If fractional sale - are you willing to forfeit operating control?
• What is the time frame that you want the transaction to occur?
• Do you (or other key employees) desire to stay post settlement?
• Are any key assets (employees, clients, vendors, Joint Venture partners, etc) at risk of leaving in the event of a change of control?
• Proceeds - is an earn-out acceptable or must the transaction be structured so that most of the proceeds come at settlement?
• Must proceeds be in cash or are you willing to accept equity in the acquiring company?

Preparation - It is important that the entity that is the target of the transaction has reliable financial and operational information which is produced regularly. This will serve multiple purposes.

• It will enable the seller and other parties to clearly understand the performance of the business.
• It will help to ensure that a repository of data is always available in the event that a buyer wants to perform financial due diligence.
• Reliable and clear operational and financial data will give the buyer confidence that he knows what he is getting and will increase the likelihood that the transaction will be executed in a timely manner.

Analysis - Accurate and reliable financial and operation information will let you and your advisors study your business and understand its dynamics. It may also bring to light items which are "less than arm's length" which could have purchase price implications, such as:

• Vendor relationships - for instance, is rent reflected for a family owned real estate that is used by the business.
• Salaries of owners - Are they at arm's length? What are the ramifications of adjusting the salaries to arm's length salaries - does this increase or decrease potential purchase price?
• Balance sheet - Are there assets on the books that are valued on a historical basis that need to be properly adjusted to reflect market prices? Is there excess cash or working capital that is not necessary to the operation of the business - don't leave it there for the seller - consider paying a dividend so that no excess net worth is left in the business.  This could effectively increase your purchase price.

Execution - To begin executing the sales process, make sure that you have a stellar team of advisors.

• One of these advisors should be a B2B CFO® partner who can provide you with the financial, operational and strategic advice that you need to maximize the operation of your business and to make exceptional transactions like a sale or purchase as effortless as possible.
• You will also need a merger and acquisition specialist - use a quality advisor like the Woodbridge Group , an M&A advisor and a  B2B CFO® strategic partner, that has a worldwide footprint. They can help you clarify your transaction criteria and help execute an efficient search and sale transaction.

B2B CFO® has a strategy for just such an engagement called "Finding the Exit."  This program has been specifically designed for our clients to help them navigate this challenging path.  Make sure that you maximize the proceeds from a "once in a lifetime" sale of your business.

The inclusion of a B2B CFO®  partner onto your senior team can give you the financial expertise and strategic insight that you need to maximize the performance of your operation.   Our partners, who have over 2500 years of cumulative experience, (including significant merger and acquisition related experience) are part of the largest US firm providing services on a part-time basis to closely-held companies with annual revenues of as much as US$75 million.

Happy New Year to all my readers! I hope your holidays were wonderful, and that Santa brought lots of goodies. Each year when the calendar turns over it is a great time to recommit to goals. There are many things that you can do to help your business prosper and flourish in 2010.

The trick is to make a commitment to move forward. You have to “do what it takes,” bite the bullet, put in the time, and do the hard work. And hard work it is. Ask anyone who has a successful business, and they will tell you about the sleepless nights, anxious moments, hard decisions, and sacrifices they made.

If you are confused and don’t know where to start planning, the following suggestions will start you moving forward and achieving your goals in 2010.Set personal goals. What do you want out of your business, now and in the future?

1. Establish a long-range vision for the business, consistent with your personal goals.
2. Establish a 3-year business vision, along with specific 3-year goals, consistent with the long-range vision.
3. Develop a brief (1-2 pages max) 1-year business plan, consistent with your 3-year vision and goals.

After you take this “long term” look, back it down to the next twelve months. Then take a look at the next six months, and finally look at the first quarter. What can you do in the next 4 weeks to move toward achieving your goals? Write it down, set time lines and due dates, and get moving! One hint…..make your goals reasonable, achievable, but able to stretch you and make you work for it.

B2B CFO specializes in helping small businesses achieve their goals. A part time Chief Financial Officer can help you establish your business direction, analyze your financials so you set reasonable and achievable goals, and help you measure your progress. If you feel “stuck in the mud,” look for a professional partner with whom you can work, with whom you feel comfortable, and who is affordable and has the background to work with your business.

Start soon and 2010 will be a banner year for your business and yourself.

Maximize your payday by planning ahead.  Any business owner knows that building a business is a time consuming and challenging process.  It required an idea, a passion and a very detailed plan to bring that idea to life - not to mention the hours of sweat equity.  Have you considered that selling your business could be equally as difficult both personally and financially? 

Many people underestimate the complexity and the value of proactive planning.  A proper exit strategy is a process rather than an event and a vital component of your overall plan to maximize the value of your business.  Most businesses require between 3 - 18 months but best practice is to begin your process at least one year in advance.   You will be more successful if you hire a knowledgeable professional to help you understand your options, increase the value of your business and maximize your pay day.

Proper Planning adds significant value - below are some things to consider in your pre-planning process:

·      Are you ready to exit your business?

o   What are your exit goals?

o   Do you want to continue working in your business or exit completely?

o   Are you mentally ready – what will you do?

o   Are you financially ready?

o   How much money do you need to retire?

o   How much money have you saved for retirement?

o   Do you understand the various types of Exit Strategies?

o   Tax consequences – a higher sales price may not yield the best result

o   Work with a professional that can help you decide which strategy is best for your particular situation

Is your business ready for your exit?

o   Get a business check-up to identify issues and opportunities for improvement

o   Improve cash flow and drive profitability

o   Grow sales - buyers avoid a falling knife

o   Strengthen your infrastructure - a well run business generates a higher price

o   Build your brand image - identify future growth opportunities

o   What makes you different? How you are better positioned to win business?

o   Timing – how is the current economy affecting your business?

o   Hire a professional that will work with you to develop a plan to improve your company’s financial health and maximize the value of your business

Whether you are considering a sale of your business now or many years from now, proper planning is vital to a successful exit.  Setting your goals, selecting a strategy and improving your company to make it more attractive to a potential buyer are just the start.  Work with an advisor capable of improving the financial health and adding value to your business before you start down the sales path.  Remember, exiting your business is not an event, it is a process.  Build the business for a successful exit and enjoy the benefits on payday.

The decision to sell or retain a business is a question pondered by many business owners. Selling a business is a momentous decision and involves critical analysis and contemplation. Although there are a myriad of factors that influence this decision, most of the pertinent issues fall into two primary categories: Financial and Lifestyle Considerations.

Financial Considerations
Although the goal in any business sale is to maximize value, most informed professionals agree that selling a privately held, mid-market business is not akin to winning the lottery. In most instances you will receive more money by continuing to own a profitable company forever than selling it today for a single lump sum. Business owners are sometimes initially dismayed when presented with an objective, professional valuation of their companies. Some exclaim, “I wouldn’t sell for that! I could earn that much in the next four years by continuing to own my business.” This is a powerful statement, however this reactive conclusion is typically reached after a rushed analysis that produces an inaccurate result.

An accurate financial analysis must begin with an objective comparison of the net after tax cash flows that would likely be available from your continuing to own the business, compared with the expected net after tax proceeds if you were to sell the business. It is key to consider the tax ramifications of each option since the income remaining after taxes is most relevant.

Lifestyle Considerations
Selling a business is a big decision – and typically one that entails a reason beyond just money. The piece of mind of not bearing all of the risks by yourself, a lifestyle change, estate planning matters or net worth diversification can be significant motivators. It tends to be more of a lifestyle decision with a financial component than visa versa. Common factors include retirement, burn out, health issues, family matters, capital limitations, risk exposure or a blending of several issues.

Case Study
You are the owner of Widget Manufacturing, Inc., a Company with $15 million in sales and $2 million in recast EBITDA (Earnings before interest, taxes, depreciation and amortization). You are 62 years old with no children in the business and no succession plan in place. The business requires about 55 hours of your time per week, and you have personally guaranteed both the corporate lease and credit line. The Company has experienced steady annual growth that should continue into the foreseeable future. Business is good.

You receive an unsolicited $9 million offer from a qualified acquirer from within your industry. Your immediate reaction is one of disappointment stating: “Why would I accept that when I could make more by running the Company for another 4 years”. But would you really?

The $9 million purchase price would be taxed at approximately 26% capital gains rate (including Federal (15% through 12/31/2010) and State) that would apply to the amount remaining after subtracting your cost basis in the business. Assuming your basis was $4 million and the balance was taxed at the capital gains rate ($5 million taxed at 26%), your taxes on the transaction would be $1.3 million, leaving net after tax proceeds from the sale of $7.7 million.

Conversely, if you retained the Company, you are paying ordinary income tax rates commonly exceeding 40%. The after tax earnings would be approximately $1.2 million and it is likely that a significant portion of the profits will not be available for distribution since it will have to be reinvested back into the business. This simplified analysis suggests that it would take at least 7 years of continued working involvement to generate the net sale proceeds of $7.7 million. This is considerably longer than the original 4-year assumption.

If you retain ownership your long-term profit may eventually exceed what you would receive in a sale, but as the Company grows so do the working capital requirements. As accounts receivable and inventory balances swell, the drain on cash flow can be substantial. Moreover, capital expenditures to replace aging equipment as well as the new high-speed widget fabricators that will be needed next year in order to keep pace with the competition will cost “a bundle”. It becomes apparent that a substantial portion of your earnings will be needed to fund current and projected operations and cannot actually be taken out of the Company. The profits that are generated, whether or not they are available for distribution, will be taxed at ordinary income rates, which are significantly higher than capital gains rates that would apply to the business sale proceeds.

In evaluating the $9 million offer, more than simple financial analysis is required to determine if it makes sense. If we assume that the net proceeds equate to working an additional 7 years, you will work another 20,000 hours until the age of 70 to net an amount comparable to that of a sale. You will also continue to assume all of the risks and responsibilities of ownership.

Summary
The sell option puts a safe and secure $7.7 million in your pocket after taxes. The “keep” option that initially seemed significantly more lucrative actually boils down to having to work about 7 more years to potentially generate a like amount. You might be saying to yourself: “even though it may take 7 years to make what I would of if I had sold, I still continue to own the business if I don’t sell it”. True, and along with that is the full load of intrinsic risks that go along with ownership, combined with your continuing to be consumed with your involvement in the day-to-day operations.

There is a fundamental cost of ownership that entrepreneurs know all too well. Legal exposure, personal guarantees, responsibility for employees and having the bulk of net worth tied up in one place can take a toll on any business owner. If earnings decline for reasons outside of your control or if adverse industry consolidations occur, it could have a major negative impact on the value and marketability of your firm.

Make sure your reasons for exploring the sale of the Company are sound. If the non-monetary motivations don’t stir your soul, now possibly isn’t the right time to divest. If you have all of the capital and strategic resources you need to grow, love the feeling of full ownership, don’t mind the inherent risks and your business isn’t “all consuming”, than perhaps selling is not the prudent decision.

When you are ready to sell, make sure your Company is as well. Too many business owners wait until growth slows and opportunities fade. The healthier the Company and the brighter the growth prospects, the stronger your negotiating position will be. Make sure you get the optimal value for your Company. Seek good counsel, including legal, tax and an experienced intermediary that can orchestrate the M&A process in a way that expands your alternatives, strengthens your position and maximizes your value.

It’s the Customer Stupid!

I know, this is a take off on a campaign strategy of the early 1990s, but it is true.  As a colleague of mine often says, what is the one thing it takes to have a business?  It’s a customer.  Your can have a product or service, a business plan, a sales team, or even money.  But without a customer, you don’t have a business. 

Focus on your customer, not your internal operations and you will be far more successful than your competition.  If you are like most entrepreneurs, you know your business and customers better than anyone else in your company. 

My point is not to neglect your internal operations, but that you as the business owner should focus on your customers.  Put the people, processes and infrastructure in place to handle the operations.  Surround yourself with talented employees and advisors, so you can develop the vision for your business and then deliver it.  

In part one of this series I reviewed what not to do when you are a troubled company and have an SBA loan.   In part two, I discussed what the Lender and the SBA could do.  Both times I stressed that you need to have a plan, based on facts, to decide your strategy and direction – BEFORE you bring an attorney into the mix.

A plan should cover four main areas.

Cash Flow – What are your real cash expenses?  Can you eliminate some cash expenses – NOT payroll taxes or any other taxes!   Having a sheriff lock your doors because your haven’t paid taxes will affect everything else you do.  Document your assumptions….the lender will look at those first, before ever looking at the numbers.  If you are going for a deferment, your numbers need to be rock solid.  You can’t go to the well twice.  If you can’t support a reasonable deferment, then you need to consider an Offer In Compromise.  Your CFO should create and maintain the Cash Flow Forecasts.

Repayment – Have you been paying?  Have you been paying what you could?  When times were good, were you on time or did it take a phone call or dunning letter?  Lenders want to help those who have honored their debt in the past.

Responsiveness – When lenders want data, they want it on time and accurate.  In many banks, once the deadline for documentation passes, you will be automatically declined for a deferment, and be scheduled for liquidation.  In other words, they will shut you down and sell your stuff.  Your CFO should be able to provide everything on demand.

Collateral – Remember how I have repeated that you need to know the condition of your collateral? No estimates of inventory will work…accurate counts and values.  Know what the liquidation value is of your equipment.  Don’t depend on fixtures or leasehold improvements, they have no value to anyone but you.  You need to know whether you assets can be sold to recover the value of the loan, and if not by how much will you miss it. 

But wait – you guaranteed your loan…what will happen?  Will they kick me out of my house?

There are really three options regarding your guarantee. 

If you didn’t pledge your home against the guarantee, they will probably not act against your principle residence.  The bank won’t benefit from obtaining a lien against the home – the guarantee from the SBA makes them whole.  They certainly won’t if there isn’t enough equity in the home.

If you pledged your home, what is the loan to value?  If there is enough equity to satisfy the loan, they probably will try to obtain a lien against the home.  The SBA will sometimes entertain releasing a lien on your home as part of an Offer In Compromise.  So in the case when you do have equity, you do need to come to the table with a strong offer to settle your debt.  If there isn’t any equity, they probably won’t kick you out of your home.  They want cash, not a home foreclosure – especially in this market.  They may place a lien on the property, one that they can release if satisfactorily paid in an Offer In Compromise.  The lien will sit there until you try to refinance your home or sell it.

The bottom line here is that before the bank goes after your home, you will have the opportunity to settle your debt via the Offer In Compromise process.  You have some control over the situation.  The best time to take control is…as soon as possible.  Don’t hide from your lender.  You need to face them so you can reach a mutually agreeable resolution, and ultimately keep your home out of harms way.  And you need to do it with your CFO by your side.

Finally, please realize that this doesn’t mean that you will be blackballed from the SBA loan program.   Losses and business closures happen all the time.  If you want to be an entrepreneur in the future, though, you need to take care of the current note in a responsible fashion.

Close

In part one of this series, we discussed about the need to approach the Lender with a plan and alternatives.  You and your CFO should have pulled together an analysis regarding the collateral condition, cash flow forecasts and debt capacity, and an analysis regarding guarantees. 

Why is a plan so important?  You, as the Borrower, need to direct him to the best possible alternative and provide him with the support for the decision.  A Lender’s powers are clearly defined in the loan documentation.

A Lender’s general powers typically are, without notice and without the borrowers consent:

A. Bid on or buy the Collateral at its sale or the sale of another lien holder, at any price it chooses;
B. Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payment for property taxes, prior liens, insurance, appraisals, environment remediation costs, and reasonable attorney's fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;
C. Release anyone obligated to pay this Note;
D. Compromise, release, renew, extend or substitute any of the Collateral; and
E. Take any action necessary to protect the Collateral or collect amounts owing on this note.

In addition, there is a paragraph from the Debt Collection Act of 1982 and Deficit Reduction Act of 1984. It states:

"These laws require SBA to aggressively collect any loan payments which become delinquent. SBA must obtain your taxpayer identification number when you apply for a loan. If you receive a loan, and do not make payments as they come due, SBA may take one or more of the following actions: -Report the status of your loan(s) to credit bureaus
-Hire a collection agency to collect your loan
-Offset your income tax refund or other amounts due to you from the federal government
-Suspend or debar you or your company from doing business with the federal government
-Refer your loan to the Department of Justice or other attorneys for litigation
-Foreclose on collateral or take other action permitted in the loan instruments."

What can the SBA do?

1.      Deferment – This means deferring some or all of your normal payment.  Your cash flow needs to indicate that you can cover ongoing operational costs, but not the debt service on the obligations.  As one writer has described it, cash needs to be “juuuuuuusst right”.

2.      Offer in Compromise – If your cash flow is not sufficient to cover ongoing operational costs, winding down the operation quickly to preserve collateral may be the best option.  This is an emotionally difficult decision.  Banks, if they cannot do a deferment, will want you to present a plan for orderly liquidation of the company.  It is important to know the liquidation value of the collateral – typically called the “Quick Sale” valuation.  Equipment brokers and distributors are your best bet for such a valuation.  Your offer, then, is an offer to pay any shortfall against the debt.

3.      Foreclosure – an involuntary liquidation of the business.

It’s easy to imagine how you can make a mistake, this is why you need a good CFO to help guide you through the maze of consequences. Do you know what to do when the sheriff seizes your equipment for the leasing company, or you can’t make a rent payment, or the IRS padlocks the door for past payroll taxes or if you are out of cash and the “Big Check” is lost in the mail?  The list could be much longer. You can’t imagine all the problems for which you don’t have an answer. If and when you decide wrong, you could be shutting your doors prematurely and paying your creditors out of your own pocket. 

Remember when you were in school. Leading a troubled business is like having a pop quiz the day after you were sick. It’s not your fault you missed yesterday’s lesson, but now you must have the right answers or you’ll fail. With the right B2BCFO on board, it’s like sitting next to the brightest kid in the class with permission to copy his answers.  In Part 3, I will talk more about the elements of a plan and some of the strategy you and your CFO need to consider.

If you want to listen to the Andy Williams’ classic while reading, here is the link on YouTube     http://www.youtube.com/watch?v=gFtb3EtjEic

Having spent a number of years in the toy industry, this time of year was always fun. How could you not smile even when putting in endless hours finalizing budgets? There were talking Alvin and the Chipmunk toys on the bookshelves or the latest edition of Matchbox cars on the desk.

One thing about the toy industry, many toys are not necessarily new ideas. They are an update of an older one. There is nothing wrong with that. People make a lot of money by updating existing ideas. Today, kids use paintball guns. Back in the 80’s and 90’s, they played Laser Tag (the gun emitted a light that set off a sensor on an opponent’s vest). When I was a kid, we used die-cast metal cap guns (there were a lot of arguments about whether you got your opponent or he got you). Even Rubik’s Cube has been updated (an iPhone-like electronic version).

Every so often, a company’s big idea to update or reinvent a product comes up short. New Coke anyone? Even Coca-Cola’s competition isn’t immune. Earlier this year, Pepsi’s Tropicana Orange Juice staged a major re-branding by updating its iconic image to a more contemporary one. Sales promptly dropped 20%. In less than two months they went back to the original image. The problem was that it was harder to find the product on store shelves. It looked like other more generic brands.

Many companies look to reinvent the way they do business. There is one company that comes to mind that has transformed itself a few times. It started as a time recording company, became an office equipment company, then computer hardware. Today it gets the lion’s share of its revenue from technology services. Ever hear of IBM?

Many small business owners find that they must reinvent themselves to compete in today’s world. An acquaintance of mine (an owner of a printing company) feels that in 5-7 years, his company will not be providing traditional print services, but will be more of a marketing design and consulting company. He is laying the foundation now.

The key to making changes in your business is to plan accordingly. The decision comes down to dollars and cents. To put it another way, it is your dollars and does the change make sense? Are the financial rewards sufficient and are you comfortable with the associated risks? Making financial projections and running “what if scenarios” will help in the decision making process. Will this exercise guarantee that you will make the correct decision 100% of the time? No it won’t, but it will help you access the risk associated with a given business strategy. It may not be as sexy as making a decision based on “your gut feel,” but at least you know you’ve considered various options.

If you need help accessing the risks in your business strategy, call Ed Baloga, at 914.474.9547 or via email at ebaloga@b2bcfo.com.