Many of the individuals coming into our office with existing companies are looking for help on why their company is having financial difficulties and how do they fix the problems. There are five steps we take to assist these companies. These steps are pretty standard and not too complex.
1. We review the financial history of the company.
Thought it is not uncommon for the financial records to be somewhat sparse and lacking in details, we do the best we can to accumulate past data to get a better snapshot of the overall financial situation.
2. We examine this data and try to identify and quantify the symptoms.
Examples include declining gross profit or payroll expenses which are too high relative to sales volume. Often this is the most time consuming step in the process due to lack of data and having to develop it as we go.
3. We apply our judgment and expertise to complete the analysis.
There are also a variety of industry reports the ISBDC has access to that can assist in identifying financial data projections for a company.
4. We [hopefully] come up with action steps that can remedy the problems.
Quantifying these changes and drafting financial projections provides a picture of where we are going and an expected timeline to get there.
5. We do periodic check-ups to evaluate the effectiveness of the action steps established.
It can be difficult for someone in business to step back and do these steps alone. It can also be difficult for a business owner to recognize that he needs help and then to go out and find it. The “we” above is the business owner, perhaps their CPA or accountant, a confidant, and the ISBDC or some other professional with experience in assisting with businesses with financial difficulties.