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Business Turnaround: Stabilize Your Environment with Positive Cash Management

by Thayne Carper

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Published on this site: March 31st, 2010 - See more articles from this month

A good business turnaround requires you to stabilize your environment; without this step, your business will likely remain unprofitable. Maintaining both a positive cash balance and abiding by a smart budget is vital.

Maintain a Positive Cash Balance

The best way to maintain a positive cash balance is by spending no more than what you start with at the beginning of the week. In other words, if you start the week with $10,000 and collect an additional $5,000 by the Friday of that week, then you should not spend more than the original $10,000. This budget will keep your company alive as you will not have negative equity after the week ends. Managing your cash is the single most important facet of building a stable environment.

Budgets and Forecasts

Following a smart budget is absolutely integral to a good business turnaround, but there are other methods used to build a stable environment. A good business knows how to make proper forecasts. You must be able to estimate sales by talking to customers about anticipated future transactions. You should evaluate your staffing, inventory and supply orders to ensure they are worth your investment. A good business turnaround also depends on your looking for inventory that is not on the books or otherwise hidden in your business.

Evaluate the Competition

In stabilizing one's environment, which again is absolutely essential to a strong business turnaround, you must look at similar businesses that you can model after or even purchase should it be in your best interests. Not only should you monitor your weaker competitors, but your sales team must also look into the possibility of wooing their best business partners, customers, and even employees, if there is an advantage in doing so.

So, a good business turnaround may depend on your ability to recognize an opportunity to acquire other, less healthy competitors should it be economically advisable. Having a strong client base and weak competition are two ingredients for creating a stable environment, and in doing so you will establish a positive cash balance. Otherwise, your business may face the kind of serious debt from which it is impossible to recover.

Monitor your Staff

There are other means of forming a stable environment within your company. You must closely monitor your staff and ensure they are doing their job. If, for example, you have a controller who is inefficient or careless with cash management, you need to respond. A controller is supposed to control the cash, and must share some of the responsibility for an unstable environment.

Business turnarounds are only as effective as the people who utilize it. If you want your company to succeed, you must be prepared to let go of individuals who either are not doing their job or doing it poorly. You must also maintain good communication with your employees on a regular basis. This builds trust and loyalty- assets that will strengthen and unify your company culture.

Positive cash management involves every facet of your business. To achieve a business turnaround, it is essential to take into account your budget and spending, as well have accurate forecasts to work with. Your knowledge of your competitors and good staff management also contribute to your ability to create positive cash flow.

Thayne Carper spent 4 years of college competing in student business plan competitions.  He's never won a business plan competition and was dropped from his college's entrepreneurial program for lacking potential. Today, he is one of the youngest published experts on the topic of business turnarounds and cost reduction. Visit his website lower supply costs up to 30% for a copy of his report "The Definitive Guide to Doubling Your Profits in less than 6 Months" and learn how you can easily lower supply and service costs up to 30% without hiring a consultant. Learn more: http://www.ThayneCarper.com/.

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