Government shutdown. Looming debt ceiling confrontation. Health care changes.
It has been a wild couple of weeks in Washington, for sure, but for America's 27 million privately held companies, it has had to be business as usual. That is, regardless of political debates or stock market swings, business owners each day have to put aside distractions and run their businesses in order to meet payrolls, keep the lights on, and turn a profit (they hope).
This is nothing new. One of the challenges of owning a business can be managing the stress that comes from dealing with not only your company-specific challenges but also big-picture economic or national issues.
"To run a business, a private company, is a very risky thing," said Brian Hamilton, chairman of Sageworks, a financial information company. "Remember, there's 27 million privately held companies. They're being run by people who have bills, and they have profit goals. Maybe some of them have kids going to college, and they've got mortgages."
Sageworks' most recent preliminary estimates on the health of privately held companies show sales are growing at an annual rate of less than 4 percent in 2013, a significantly lower rate than in 2012 and 2011. Profitability, as measured by net profit margin, remains strong, but the sales slowdown is concerning, given these companies drive job creation and U.S. GDP, according to Hamilton.
In tumultuous times, whether they're short-lived or longer lasting (like the Great Recession), it's a good idea for business owners to remember and refocus on internal operations, he and others advise. "Focus on what you can control," Hamilton said. "There's literally no point in worrying about some of the issues that loom large in the media world."
This doesn't mean engaging in extended navel-gazing. Rather, consider these four areas of your business that are under your control, and determine what you can do this coming week to:
Improve customer service: Getting customers and keeping them happy is what business is all about, but it's certainly not easy. Seek some customer feedback this week and use it to improve every step of the sale.
Improve quality: "You can control the quality of your product or service," Hamilton said. Good product design and delivery are important to the overall quality of what you're selling, but it's often the small details during production that can make a big difference, too.
Cultivate your culture: Workers are often one of the biggest, if not the biggest, costs in a business, so what can you do to manage this resource better? Hamilton said it's important to "hammer away" at the major points where you expect success or where you won't accept failure so that you and your staff are focused on what really matters. George M. Thomson, CPA, principal at accounting and consulting firm Filomeno & Company, said treating your team right and building the right culture are especially important in order to weather times of crisis. If you do those things, he said, "When you go through a difficult time and the company is struggling, your team will understand and they'll pick it up. They'll be engaged and motivated to help the company through it as well. They want to be part of the solution, not part of the problem."
Check costs and capital. Close monitoring of costs is essential to managing your cash position, so consider areas you may have overlooked for several months. Use industry benchmarks to evaluate where you may be overspending compared to your peers, and then consider whether the returns justify the added expense. Evaluate how well positioned your business is to weather a storm of three to six months, said Thomson. "This is really old school, but during good economic times, be proactive and make sure your company is ready for the inevitable next period of uncertainty," he said. "The number one thing is keeping a strong, clean balance sheet." This involves basic steps like staying on top of receivables and inventory. "If you're having trouble collecting receivables and turning over your inventory when times are good, it only gets 10 times harder when you need the money and everyone else is cash strapped as well."