‘A Recovery Only a Statistician Can Love’

This editorial, from the The Washington Post talks about some of the same things I am concerned about going into 2010. While we will get some positive GDP numbers, perhaps as soon as this quarter, it won’t feel much like a recovery for most folks.
Essentially, if you don’t have a job now, you might still not have one a year from now. A depressing though to be sure, but what does it mean to a small business owner?
First, if you’ve let the company slip out of the black, get back in it now. I had another former client call me the other day. He said he was bleeding red ink, but “couldn’t” cut any more positions because all 20 employees were critical. He just needed some new financing to bridge the gap, and continue taking good care of his remaining customers.
He called again the next day. His financing was turned down (surprise!) and his largest customer told him they were reducing his services by 50%. He asked that I review his resume, since it had been decades since he had been job hunting.

If you are in the black, even by a smidgen, you can stay in business indefinitely. If you are in the red, even by a minuscule amount, you have started a countdown clock on the life of your company, and you don’t know how much time is left on it.
If you aren’t profitable you aren’t really in business. The company I am discussing had fallen from $5.7 million to $4 million, a 30% drop. Yes, that is painful and extremely difficult to deal with, but they had been at $4 million before…on their way up! Back then they thought it was great!
Now they are going out of business because they can’t figure out how to operate at an “unsustainable” level.
Don’t let control of your business slide out of your grasp. Sit down today and look at scenarios for 75%, 50% and even less revenue than you have today. Who stays and who goes at each level? What products or services might you have to jettison?
Most importantly, what is the actual level at which you cannot make money? That’s the level at which you close the company, before your savings and sanity follow it down the drain.
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