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How to Reverse Your Sagging Business Income

Aug 17, 2007
This is one big question everyone across business communities wants to know the answer to. Those who are struggling to reverse their southward-heading revenue trend all burn the midnight oil in pursuit of reversing the sagging trend of their business revenues. Unfortunately, there is not one magic formula. It takes a fully concerted and sustained effort by all areas of your business before you see results. Without this, you potentially run the risk of the liquidation of your business.

How To Reverse Your Sagging Business Income

There are enough indicators of the changing fortunes of your business revenues. Invariably, in a miniscule percentage of cases, it could be because of various reasons. However, there a few steps you can take to bring your revenue position back on track. We can classify them as short term, medium term and long term strategies.

Short Term Strategies

You can further divide this as immediate steps and short-medium term steps. You need to check to see whether there are long term receivables pending and recover them as soon as possible. Reduce payables, and if possible cut down on them until your situation improves by tightening your proverbial corporate belt. Making a plan and rescheduling payables with your vendors will help you conserve much-needed cash.

Medium Term Strategies

This stage extends typically between 2-5 years. Place higher emphasis on increasing productivity. Innovative adjustments to production processes and removal of critically unwanted steps help a lot in this direction. You can put on hold certain expansion plans such as real estate purchases, which take away a lot of money while paying dividends very slowly. You can divert this cash to working capital needs.

The medium term plans of increasing the revenue must include concentrating on your other revenue streams. You need to consolidate this stream of income as it usually has an advantage of cost benefit in comparison to your regular income. Some companies have a very high contribution from this stream. This applies to small business too.

Long Term Strategies

Long term plans are usually more than 5-10 years long, typically varying across the industries, although less so for small businesses. By this time your short and medium term plans will have started. Your payables will have eased up if not fully recovered. You are now seeing better return on investment as a result of the steps you have taken in the first 2 phases. Your loans on working capital and investment capital will begin to free up. The long-term strategy now should aim at value creation and vision statements for the road ahead. You should start focusing on strategies such as buying real estate, acquiring businesses and investing in human resources like training and hiring quality people.

In all cases, the joining thread must be financial discipline. Lack of this could be disastrous. More than anything else, your ingenuity and determination should be your motivating factors.
About the Author
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
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