Many business owners find themselves scurrying about from crisis to crisis, and when they take a minute to reflect, it’s hard to imagine what normal was a short four months ago.
As a member of Entrepreneur’s Organization Reno-Tahoe, I am blessed to have seemingly endless webinars with a litany of experts to help me navigate each blow dealt by the government and the ever-changing need of customers and vendors alike.
This week, I thought it prudent to revisit the basic tenets of entrepreneurship, and hopefully give a few nuggets that could help you and your team focus on a sustainable business model, well beyond the current pandemic.
First, let’s start with my working definition of entrepreneurship — “an endeavor undertaken for gain that allows one to choose their own outcomes, rather than those prescribed by an employer.”
A few points of this definition might trouble you. Namely, it is an endeavor undertaken for gain. If you were struggling making money before the pandemic, and are now bleeding cash, you might consider asking the ORS for permission to be a charity, and asking for contributions to continue to fund your business. If your patrons would find it laughable that you are asking for handouts, you might re-consider your entire business model.
The other part of the definition that you might struggle with is the whole part of “choosing outcomes,” particularly in the current regulatory environment. I have heard horror stories of OSHA representatives fining business thousands of dollars simply because they are following industry-accepted safety practices.
Case in point — a construction company owner was fined because his employees were not 6 feet apart carrying a granite slab into a house. It is well settled that each employee can only carry a certain weight. If the number of employees required to carry a slab does not permit 6 feet of spacing, now the project is on indefinite hold. Evidently, it didn’t matter that everyone has face coverings.
Savvy business owners will identify these types of issues and have a lack of distance surcharge. What if someone tests positive — the whole group has to self-quarantine!
The idea here is that understanding the legal landscape gives you an upper hand. Who knows, maybe those 12-foot granite squares will come back into vogue for the modest homeowner.
Pivot fast, pivot often: The truth is that most people continue with what they have always done. Feedback systems are woefully inadequate. The entrepreneurs who were nimble seemed to fare better as the pandemic rolled out.
It didn’t mean that every decision was spot on, but these business owners were able to make bold decisions quickly, and recalibrate as better information became available.
Know your customer: Be laser-focused on who your customer is, as well as the value you bring to the equation. Don’t be drawn into the siren’s song of big revenue and no margins. If you don’t have sufficient margin, you cannot fix your profit problems with volume!
A good exercise is to remind yourself why you started the business! You must be able to articulate what you do better than most, and as good as any.
Lastly, “You can’t manage, what you don’t measure.” A keen understanding of your key performance indicators (KPIs) and knowing how much volume is required to attaining both being cash flow positive and having varying levels of profitability is mission-critical to accomplishing your entrepreneurial dream!
This article is general in nature. Consult a qualified CPA to understand how your facts apply.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at firstname.lastname@example.org.