#1. Play Defense
Economy down? Balance sheet and income statement look bad? If your business is in trouble, the answer is working on increasing revenues while drastically cutting expenses. The stupid thing to do is frantically search for a new business or revenue stream. Expanding your way out of a business problem can be done, but it is a fool’s errand most of the time.
Have trust issues? Get over it. Unless you are a one-man shop, you need to learn to delegate. And that requires learning to trust people. If you don’t trust who is reporting to you, fire them and hire someone you do trust. Simple as that.
Sell a bunch of different products? Try running an experiment. Increase the price of a few of them by 10 percent. If the quantity sold of those items decreases by less than 10% – good job. Play with it if you wish. Some products and customers will be more or less price sensitive than others. Remember, the goal is to increase revenue, not sell more units.
Business going great, or even par? Start an emergency fund. More or less is fine, but trying to save 15 percent of after-tax profit is a good place to start. Put it in a separate checking account or money market fund and save it for a time when you need it. When times make a turn for the worse, few things can be more satisfying than having a huge cash cushion or buying out a supplier or competitor.
#5. Avoid Debt
Finance professors will argue about good debt vs. bad debt, the cost of capital, and alternative returns. Do not listen. Who cares if you can borrow it at 4 percent and reinvest it at 9 percent. You may do that today, but it’s the uncertainty of the future that will kill you. What is good for the individual is good for the company. Good debt is no debt.
#6. Don’t Hire Friends and Family
Does your brother-in-law need work? Help him look for a job somewhere else. You don’t hire family because if who you hire is incompetent, lazy, or stupid, you want the ability to easily fire them. Try firing a family member. Life at home will never be the same again. The whole thing is not worth it.
If you are in the business world (or anywhere else for that matter) do not burn bridges. Relationships matter. Be professional at work. Keep your mouth shut about your personal feelings and get over being petty. I promise you, about 95% of the things you get worked up about are stupid. In short, grow up.