Following the dismal prices of the last three years, especially in the dairy industry, I am certain that if I asked anyone if they were prepared to receive higher prices, they would respond by saying, “Of course, I am. Are you kidding me?” Yet, I would ask, once again, are you truly prepared? Are you 100% ready?
Here is how you will know. As prices in your industry rise, are you totally prepared to hit the ground running? I know it’s been tough the last three years in the dairy industry (and this can apply to any industry), but if you are really prepared, you should have a plan to complete the following tasks:
- To move forward & return to profitability. A sound financial projection will tell you how soon you can expect to reach this level.
- To catch up on any and all Accounts Payable that are not current.
- To pay down your Lines of Credit as much as possible, as soon as you can.
- To make the changes & improvements necessary to boost your Profitability.
If you don’t have this plan in place before your revenue levels increase, you could fall into the trap I’ve seen so many times before:
- You slog along with your Accounts Payable, reducing them somewhat, but with a fear that if you pay them all the way down to current levels, you might need that money later. While that need may be partially true, if you get these paid down, I’m sure your Vendors will be more willing to work with you in the future. Likely, your banker will be, too.
- You resist reducing your Lines of Credit, fearing, once again, that you may run short of cash & justifying this inaction by saying, “Hey, it has been rough.” No one will disagree that it has been difficult, but lenders can only work with you within their standard lending guidelines, so do all you can to reduce your lines of credit when you are able to do so.
- You just get your plans in place to initiate the improvements you know you have needed to complete, and then, “BAMM,” you are hit with low prices again.
There is a better way. Here is your Call to Action:
- Develop a Plan, as outlined above.
- Set your priorities. If you are behind on Accounts Payable or other items, you may not be able to correct them all at once. However, do not let what you cannot do (e.g. paying them all back at once), keep you from doing what you can do (e.g. an orderly repayment of Accounts Payable).
- Determine what you will need going forward to make your business more successful. Then, you won’t get caught flat-footed, wishing you had taken action sooner. Instead, maybe you’ll be talking to your banker about your next great move forward!
If you would like some assistance with this process, I offer you the following. On July 31, 2017, our completely redesigned website at Success Strategies, Inc. went live. You may want to take a look at a new video series we call The Strategic Gameplan Series, which will be listed under our Financial Techniques at www.success-strategies.com. Check it out. It may be just what you need for an entirely new game plan!