Create Solid Business Foundations
I am not usually too interested in politics, but this year things are different. It may be that both candidates/party choices make me really nervous or it may be that I’m just getting more exposure because I’m paying attention to all the financial crisis “sky is falling” news. Then again, I now have two boys in the military and my daughter goes in next June, so maybe that’s it 
I resisted posting this for several days, but with more doom and gloom floating through the news and message boards, I decided what the heck.
In any case, I’m paying much more attention to politics than normal for me, and I found myself watching the presidential debate a few days ago. They were talking about the whole $700B bailout package, and I believe it was Obama who said something to the effect of: “Businesses need to be able to get credit so they can get loans to make payroll, otherwise you/the employees, won’t get paid”
Uh… excuse me?
I could not believe my ears!
If a business needs to get a loan just to make payroll, that business has a heck of a lot more than credit problems.
Can you imagine going and getting a loan to pay your mortgage/rent, electric or phone bill? Or getting a loan to buy groceries? All that does is stop the blood flow temporarily, it does nothing to actually fix the problem.
Now I see this as an excellent lesson for all home and internet based businesses. Thankfully most of us are not in the position of having to worry about how to make payroll, but the lessons are still quite the same. I’ve talked many times about the importance of cash flow in your business, and the latest news headlines simply reinforce this basic principle: Without cash flow, your business cannot survive.
And cash flow comes from creating solid business foundations. It doesn’t matter what your business model is either. If you’re a website publisher, an affiliate marketer, a service provider, a programmer, or anything else. Having solid business foundations is the key to surviving… sometimes even thriving… regardless of how down things look to the rest of the world.
Now is not the time to be lazy, lose focus, or change gears. (Or hope the credit market opens up soon)
If you publish websites and content then you need to keep doing that, consistently. In fact, step things up a notch and put in a bit more time and effort than you usually do. Add more sites, add more content, add more “oomph”.
If you run a service based business, be extra attentive to your client’s needs and concerns, and try to put forth just that little extra touch of something into each finished project.
Firming up the foundation of your business is not usually too difficult. It’s just a matter of knowing what your business is, having at least a starter action plan, and putting in a little more effort and quality everywhere you can. This will not only allow you to get through the tougher times of today, but it will make you rock solid for the future too.
October 10th, 2008 at 3:51 pm
When I ran an offline business, I sometimes had to do what Obama said. All it would take would be for a couple of my major clients to be late paying and I wouldn’t have enough cash to pay my staff. No fault of mine. Nothing else I could do about it. Not a sign that my business was not sound.
Pearson Browns last blog post..Stomper Nets Me
October 10th, 2008 at 4:02 pm
Hi Pearson,
I’ve been there too actually. It happened with big corporate consulting clients as well as technical and magazine writing clients - If a couple of them didn’t pay on time, or had a crisis of their own, my business was in trouble.
But that proves my original point. I learned through those hard times that I couldn’t live like that, and my business would not survive that happening too often. The first time it happened getting a loan to tide me over was tempting, but I knew that was just putting off a bigger problem. So I decided that if my business could be in trouble financially due to a couple of late payments, then my business was not as solid as it should have been.
These days I try my best to shore things up much more firmly. Examples of ways to do that:
- If the bulk of your income comes from one or two clients, you need to either put something into place that assures those clients pay on time - or in advance. Or you need to add more clients.
- If the bulk of your income is from one website, you run the risk of financial ruin if that site is hacked, the server goes down and so on. Putting more websites into place - even if they only earn small amounts individually - can help spread the risk around.
The same applies for products, services, and so on. If one of your products brings in the bulk of your business income, your business is at risk for financial problems if that product suddenly stops selling for any reason. If one of your affiliate partners provides the bulk of your income and they have any problems which delay getting payment to you, again your business can go under.
And in my mind those are scenarios where the business could have had much more solid foundations.