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Navigating a business is extra tricky these days.  The speed of economic and technological changes means that the right path yesterday may not work today and could be a disaster by tomorrow. Even economic cycles are also taking much less years to complete than it has been decades ago. Solving these dynamic problems is what separates those who excel from the companies who are closing the doors.

1. Cash, Borrowing, and Resource Management

Cash is King!  We’ve all heard this maxim and it is more true today than ever before.  A healthy profit may look nice on your financial statements, but if capital expenditures or receivable collections are draining your cash, you won’t be able to stay in business for long.  Too often executives and small business owners fail to focus enough on cash flow generation. In order to head off this problem, businesses must either be adequately capitalized and must shore up cash reserves to meet all obligations as they are needed and to handle downturns and emergencies that may arise. Cash management becomes even more important during recessionary times when cash is flowing more slowly into the business and creditors are less lenient in extending time to pay.  For small businesses, handling business accounting and taxes may be within the capabilities of the business owners, but professional help is usually a good idea. The complexity of a business’ books go up with each client and employee, so getting assistance with managing cash and the bookkeeping can allow you to excel when others are calling it quits. Cash flow challenges are exacerbated by the lending climate, particularly for small businesses. Bankers are unlikely to be more liberal in their lending policies any time soon.

2. Integrity

Business has never faced the type of moral challenges that it faces in today’s global economy. Everyone is struggling to be more successful, to make the next quarterly earnings estimate, to keep their job, to earn a big bonus, or to compete effectively.  The temptation to cut corners, omit information, and do whatever it takes to get ahead occur every day. Many business employees and executives succumb.  Sadly, the theme becomes highly infectious and soon people actually start to feel like lying a little, or stealing a little, or deceiving others, is just “a part of business”.  These practices erode the trust that needs to exist between employers and employees, between business partners, between executives and shareholders.  Without trust, the business will not be able to compete effectively and it will eventually fail.

3. Increased selection and competition 

It’s never been easier to start a business. Gone are the days when it took weeks, months, and a myriad of forms to get your business started. Now if you can buy a domain name and register your business online, you’re in business. However, staying in business is a much more complicated matter.  While business expertise was once an expensive and time consuming endeavor, you can now find experts online for many questions that you might encounter.  There is help to starting an online store, for example, for getting business cards and marketing materials – all at a very reasonable cost.  The ease of starting a business creates a much broader level of competition.  You might find different business competing for each product you sell and new business that focus on a single item and spend all their time and focus on being the very best at just one thing.  This increase in overall selection and more focused completion will make it more difficult for businesses of all sizes to retain customers who can change their suppliers with the click of a mouse.  It’s a battle of perception, focus, and marketing. Business owners who master these elements and provide a great customer experience will win the sale.

4. Marketing and Customer Loyalty

Along the same lines as increased selection and competition is the challenge to market to potential customers effectively and retain your existing customers. Smartphones, social media, texting, email, twitter and other communication channels are making it easy for businesses and individuals to get their messages out.  Figuring out the right marketing channels is key for businesses to be successful in the future.  Where are your customers and how do you best reach them and what is the right messaging?  Once you get a new customer, how do you keep these customers when they are constantly barraged by competitors of all types, sizes, and locations, trying to convince them that they can do it better or provide it cheaper?  Identifying what your customers want and doing a better job of giving it to them will make all the difference in your company’s future. The conservative spending climate is also causing a shrinking customer base. Consumers are still quite conservative with their pocketbooks, and as a result, organic growth from current and new customers is not growing as quickly as businesses would like. Business owners and executives are spending more time figuring out how to go above and beyond to keep existing customers, while at the same time figuring out how to cost-effectively reach new customers — without competing solely on price, which always ends up to be a race to the bottom.

5. Uncertainty

All of us, and especially business leaders find great discomfort in uncertainty. Because of global debt and economic struggles, uncertainty is more pronounced today than in the past. The sad news is that uncertainty leads to a short-term focus. Due to uncertainty, companies tend to shy away from long-term planning in favor of shorter-term goals. While this might feel right, a failure to strategically plan five to ten years into the future can end up destroying value. Businesses must learn to balance the need for a more reactive, short-term focus with the need for informed, long-term strategies. Uncertainty tends to put many into a general malaise – unable to get anything done. The ever-running news cycle leaves everyone feeling a bit on edge. This causes business owners and executives to hunker down and customers to stop spending. You need to shut out the world ending news and get back to work.”

6. Regulation

Till recently, retail lending was typically based on an assessment of an applicant’s three-month bank statement and self-declared liabilities. Your employer, rather than your own financial characteristics, often defined whether you would be eligible for credit or not. This is changing; banks can now pull bureau data and assess the total debt, repayment obligations as well as repayment behaviour of credit applicants. How you have behaved on your credit facilities will now be available to banks to make further lending decisions.

7. Problem Solving and Risk Management

A major challenge for all companies is identifying, assessing, and mitigating risks, including human and financial capital, in addition to the macro economy. The lack of a sophisticated problem-solving competency among today’s business leaders is limiting their ability to adequately deal with risks facing their businesses. This is why corporate managers tend to jump from one fire to another, depending on which one their executives are trying to put out, and in many cases the fast-changing business environment is what ignites these fires. So what is the problem to be solved? We believe, to do well into the future, companies must resolve that problem solving is the key to business, then develop a robust problem-solving capability at all levels.   As companies proceed to identify risks, they will then have the problem solving skills to know how to best mitigate them.

8. Implementing Corporate Governance

Through seeing how corporate governance works, you can tell why it is important. It helps streamline the process and gives people accountability. The point of corporate governance is to help the decision making process. As mentioned above in the principles of corporate governance, one of the main goals is to clearly explain to the board, the stakeholders, and the shareholders what their duties and responsibilities are within the company.With knowing those roles and responsibilities, the people within the corporation can understand what they are held accountable for. Corporate governance helps corporate to lowering risk, wider public acceptance, build a public image, helps attract investors or PE funds and have a successful business.