The Tribune

By SIMON COOPER

Res Socius

WHEN businesses fail, the reason is usually cash flow or spending money they are not making. Some expenditure is unavoidable, such as replenishing stock and affording premises. The rest is either discretionary, or will benefit from trimming down. When you do so, your profits automatically go up. That is running a business intelligently, as opposed to propping up baggage accumulated through bad habits.

Having enough cash to cover life's necessities is akin to having sufficient oxygen to keep our brains afloat, and that is equally true at home or when in business. Watching the bottom line is almost as important as stretching margins, and it is not as difficult as you might think. You just need to start thinking laterally.

Take out your pen and paper and Analyse Non-Stock Purchases - It is amazing what lurks in general expenses and stationery. Chief reason for this is that individual purchases are so small, it is hardly worthwhile to get into the car to save on them. Bulk purchases of minor items often are not even considered.

What you really need is better planning and a discount deal from a single outlet, as opposed to buying in a gross number of pencils when they are going cheap. A good start is to set a budget at 10 per cent less than current actuals, and stick to it through discipline and self-control. You will enjoy counting out the fewer widgets you are going to have to sell to cover the monthly cost of printer paper, and the extra money you will be banking.

Get Tough on Staff Performance - Almost without exception, staff will raise an objection if you pay them short. I just cannot understand why managers and business owners accept short hours in return. Introduce a manual sign-in register. Ask yourself two questions: Who's complaining, and why so?

Do you find that your employees are idle first thing in the morning, or later in the day as the afternoon wears on? The chances are that demands on them are either lower at those times, or that somebody is not managing them optimally. Shift your morning meeting to the middle of the day when the counter is busy. Spot the difference in the activity at other times.

Grab your Transport Costs around the Neck - Just because you need a delivery or collections van, it does not mean you shouldn't manage it just like you do your telephone bills. Keep the vehicle maintained correctly, watch the route your driver follows, and you could just get a pleasant surprise at month's end.

My grandmother used to tell me: "Look after the pennies and the pounds will take care of themselves." I can't think of a better place to start than in the Bahamian business world. Everywhere I go I hear people complaining about poor service. I think they are actually talking about poor businesses management, wasting time and wasting money that their owners don't even miss.

NB: Simon Cooper is a founding partner of Res Socius, a business brokerage firm authorised by the Bahamas Investment Authority that facilitates the sale and purchase of businesses. Contact 376-1256 or visit www.ressocius.com.