Do your business plans come across that way? Is that what your lender is thinking when you walk out the door after laying out your strategy for the recovery?
If you are planning to pick up the pace as the economy improves, you are in good company. Inventory needs to be rebuilt. Perhaps employees rehired. There is opportunity in the air and we all are breathing it in.
I was out kayaking on Saturday after adjusting the seat to see what difference it made in my paddle stroke. It had been awhile since I was out in the boat and I could only go a short way before pausing for a sip of water and a bite of the power bar.
My goal was the old oyster boat down the bay. As I sidled up to the boat, I decided that on the way back I would pick a pace I could sustain and keep paddling…the entire way home.
I did it. It was slower and more deliberate. I had time to get the full body rotation into each stroke. I could adjust as I went along. By the time I got home, I realized I could have kept going. I found the right pace for a one hour paddle.
How to tell what pace is sustainable…
- Make a list of the major assumptions you are making regarding your business improvement in the next three months
- Customers will be able to afford what they have ordered
- Skilled employees will be available for rehire
- You (if you are the business owner) will stay healthy
- The available credit you currently have will continue to be available
- Your rent won’t go up
- The employees who stuck out the recession will want to stay
- Conduct a stress test for your business. What would happen with each one of these assumptions if it did not go perfectly.
- Talk it over with trusted advisors…perhaps others in your industry, your CPA, or other business owners.
Slow and steady?
As business picks up, pick your pace. Make it sustainable. Then help your lender understand the plan, the pace you have chosen to return to profitability (or higher profitability) and why it makes sense.
Not every business move needs to be slow…but it does need to make sense. It is not smart to set a pace that is sustainable only if everything goes right. Slow and steady just might win the race. And your lender might be able to tell the difference.