Year In Review
Wednesday, October 14, 2009
The evening news and morning papers convey that these past 12 months have been the most difficult year for US businesses that most of us have ever seen. For most companies, your internal metrics and financial statements clearly paint the same gloomy picture.
Over the past year, I have had the opportunity to speak with business owners from various industries and backgrounds. The message has been consistent – somebody turned off the faucet sometime in the Fall of 2008. Since then, businesses have been struggling to comprehend the impact of these economic changes and understand how and when to react. The faucet hasn’t been turned back to a full flow yet, and most businesses don’t expect that to happen until 2010 or 2011.
Management teams and shareholders typically move into the fourth quarter with their eyes fixed on business projections and the main question is whether or not we will hit the forecasted goals for the year. Going into the fourth quarter of 2009, however, the big question is whether or not we will be able to break even.
Even companies who found themselves in an industry or niche that was somehow immune to this turn in the economy have made efforts to cut costs. It seems that all companies have evaluated, and the vast majority has implemented, personnel cuts over the past twelve months.
For many companies, the answer to whether or not they will break even in 2009 is tied closely to when they made their big cost cutting decisions this past year. Ask a group of business owners to line up chronologically as to when they made their personnel cuts this past year and you will be able to see their bottom line move from profitability to a net loss down the line. This shouldn’t be surprising – we have always been told that we need to be quick to respond in business.
The sustainability of these cost cuts is again coming into question now that we are approaching the one year mark of running a slim and trim operation. In some cases, the team spirit that hosted the original cuts has faded and the willingness to give it 110% day in and day out is fading. In other cases, we will soon be discovering the unforeseen affects of our cuts. For example – cutting the frequency of the preventative maintenance on machines may be coming back around to incur larger repair costs after time.
In some cases, we can also see a gradual decline in that hard stance we took on cost savings efforts. It was clear to everybody a year ago that cutting these costs was necessary to survive. But gradually, over the past twelve months, we have likely slipped a little and are reverting to our previous habits. Depending on your outlook for the future, it may be a good time to re-visit the cost saving efforts and make sure everybody is still on board and alert.
Don’t allow the 12 months that have passed since last Fall to lull you into a false sense of security for you business’ future. We have all come a long way to survive this past year, but we are not out of the woods yet. Now is not the time to sit satisfied with mediocrity.
Michael Bedel, CPA
Sponsel CPA Group, LLC
at 6:51 AM Link to this Article 0 Comments
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Over the past year, I have had the opportunity to speak with business owners from various industries and backgrounds. The message has been consistent – somebody turned off the faucet sometime in the Fall of 2008. Since then, businesses have been struggling to comprehend the impact of these economic changes and understand how and when to react. The faucet hasn’t been turned back to a full flow yet, and most businesses don’t expect that to happen until 2010 or 2011.
Management teams and shareholders typically move into the fourth quarter with their eyes fixed on business projections and the main question is whether or not we will hit the forecasted goals for the year. Going into the fourth quarter of 2009, however, the big question is whether or not we will be able to break even.
Even companies who found themselves in an industry or niche that was somehow immune to this turn in the economy have made efforts to cut costs. It seems that all companies have evaluated, and the vast majority has implemented, personnel cuts over the past twelve months.
For many companies, the answer to whether or not they will break even in 2009 is tied closely to when they made their big cost cutting decisions this past year. Ask a group of business owners to line up chronologically as to when they made their personnel cuts this past year and you will be able to see their bottom line move from profitability to a net loss down the line. This shouldn’t be surprising – we have always been told that we need to be quick to respond in business.
The sustainability of these cost cuts is again coming into question now that we are approaching the one year mark of running a slim and trim operation. In some cases, the team spirit that hosted the original cuts has faded and the willingness to give it 110% day in and day out is fading. In other cases, we will soon be discovering the unforeseen affects of our cuts. For example – cutting the frequency of the preventative maintenance on machines may be coming back around to incur larger repair costs after time.
In some cases, we can also see a gradual decline in that hard stance we took on cost savings efforts. It was clear to everybody a year ago that cutting these costs was necessary to survive. But gradually, over the past twelve months, we have likely slipped a little and are reverting to our previous habits. Depending on your outlook for the future, it may be a good time to re-visit the cost saving efforts and make sure everybody is still on board and alert.
Don’t allow the 12 months that have passed since last Fall to lull you into a false sense of security for you business’ future. We have all come a long way to survive this past year, but we are not out of the woods yet. Now is not the time to sit satisfied with mediocrity.
Michael Bedel, CPA
Sponsel CPA Group, LLC
Labels: Cost Cutting, Economy, Financials, Sponsel CPA Group
at 6:51 AM Link to this Article
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