Several years ago, Treasure Valley SCORE initiated a crisis management initiative. The purpose is to provide small businesses with a rapid response team of SCORE counselors. Working with the business owner and the financing loan officers of the referral bank, this team will develop a work plan with a prioritized set of objectives and tactics, with specific deliverables and time benchmarks. When completed, the actions should provide a ‘roadmap’ for turnaround or dissolution.

When a business is late on payments, is a slow payer, must request refinancing, is restructuring a business loan or requires a commercial line of credit it is time to get serious about the condition of the business.

Small business owners can readily initiate a business review process at any time and the sooner the better. Through the analysis of financial and marketing data, the business owners should be able to assess their current status and either take corrective action or seek assistance.

#1: Check Your Financials

Based on SCORE’s experience in assisting troubled companies we recommend the company owner initiates a financial review to include:

  1. Do you have reliable and current financial statements?
  2. When were your financial statements last up-dated?
  3. Do you examine your financial statements monthly?

The financial statements to be reviewed include the following:

  1. Income (AKA Profit & Loss) Statement [monthly for 12 months]
  2. Balance Sheet [annually for 3 years]
  3. Cash Flow Analysis [monthly for 12 months]
  4. Inventory Analysis [quarterly for 3 years]
  5. Accounts Receivables Aging Report [monthly for 12 months]
  6. Collections (AKA Bad Debt) Report [monthly for 12 months]

You should know the standard financial ratios for your industry. In addition, prior year-end financial statements will be useful in allowing you to compare current results with those of prior years.

#2: Understand Your Customers

From a customer standpoint, the following should be part of the review:

  1. Who are your “Priority One Customers”?

    1. What do they want from your product or service?
    2. How do you know that?
    3. What are your current plans to increase your sales?
  2. Do you segment your market and how you do it?
  3. If you do not segment how you differentiate among different customer groups with different wants and needs?
  4. What is your value proposition?
  5. Is your market segment expanding or growing?
  6. Do you have a marketing plan?

#3: Focus on Your Staff & Employees

Do you employ others?

- Do you have formal or informal measures of employee satisfaction? Describe how you take these measures.

When were these measures last taken?

-If you have informal measures describe how you assess employee satisfaction and what are the results of your last assessment.

Do you use independent contractors or temporary agency personnel?

Do you have formal or informal measures of employee productivity?

If you have formal measures:

  1. Describe how you take these measures.
  2. When were these measures last taken?

If you have informal measures please describe how you assess employee productivity and what are the results of your last assessment.

#4: Learn to Process Focus

Do you have formal written processes for producing your products and/or providing you services?

When were your processes last up-dated?

How do you ensure your products and/or services are made/delivered the same way each time you make and/or deliver them?

How do you know your production and/or delivery are as efficient as possible?

Do you have quality standards for your products and or services and are the standards tracked?

#5: Build Your Business Plan

  1. Do you have a written business plan?

  2. When was it last updated?

  3. Have you considered an advisory group to periodically review and critique your business plan?

By completing an assessment of these five key areas of the business the owner should have a good picture of the overall health of the business and be able to develop a prioritized plan for improving business results. SCORE mentors are available to help you with this review and evaluation process. Schedule an appointment with a mentor today!

Is your business in trouble? Take these 5 steps.