BUSINESS & PROFESSIONAL
more
fun
than
texting
career coach
Don't Eat The
Seed Corn
It's always
the right time
to sign up
for an art class
or workshop
@ the BBAC.
R
BIRMINGHAM BLOOMFIELD
Artraini
1516 S. Cranbrook Rd.
Birmingham MI 48009
2 4 8 . 6 4 4 . 0 8 6 6
BBArtCenter.org
1536250
JEEC
Turn your old
GULL) into CAM l!
We will buy ALL of your precious
metals, diamonds & watches.
32940 Middlebelt Rd.
(AI I I
Nlilt• Rd. ill (11,.. litnatkul
(248) 855-1730
Imillingtoti IIiII.. NIiLltigali
mit
AJ Weiner
4 0 Under 4o
Crain's Detroit Business
Congratulations from Tomatoes APIZZA
1542390
36
October 8 • 2009
ecently, I went
into a store
to purchase a
sports jacket,
but they didn't have my
size. It seemed odd as
I have frequented this
shop for many years and
I have always found my
size.
My son, Jonathan,
shared with me a similar
tale. Jonathan, who runs
Compeople, a computer
installation, repair and
IT support business, went to an
office supply store a few weeks
ago to pick up some ink for his
home printer. The inventory was so
sparse he left empty handed.
While I certainly advocate run-
ning your business as lean as pos-
sible, I am puzzled by business
proprietors who reduce inventory,
overhead staff and spending so
drastically that they may not sur-
vive.
It reminds me of the analogy
about seed corn. At some point in
the early years of many agricultural
settlements, there were times when
the crops did not produce enough
food to last a winter. To keep from
starving, some settlers would start
to eat the seeds they had been
saving to plant; however, when
spring arrived, the settlements had
no seeds. As a result, there would
be no harvest that year and the
people who were depending on
the next crop would begin to die of
starvation.
If you want to survive the tough
times, don't eat your seed corn.
Business is based on prof-
its, which are like harvests.
Investments are like seed plantings.
Producing profits requires invest-
ments, and the more investments
you make today the better your
chances of profiting in the long
term.
I would advise all of you to be
prudent before bringing down the
ax. The downturn has made it easy
for company leaders to become
obsessive about making cuts, yet
cutting too much could cause you
to fail before the economy pulls
out of this recession. Massive cuts
can make it impossible
to keep up with customer
needs.
I recommend the fol-
lowing to keep your busi-
ness profitable in the long
term:
• Modify your business
plan. If you do not have
one, the time is now to
get it done.
• Take the time to do
some strategic planning.
• Make sure you have
enough inventory to keep
customers happy. Don't deplete
your inventory to the point where
you cannot do business.
• Consider eliminating lines,
products, services that are less
profitable than others. If this results
in terminating employees, it will not
impact the remaining lines, prod-
ucts and services.
• Get into survival mode. You
can no longer serve your custom-
ers with products that are not prof-
itable.
• Don't cut staff so much that the
people who work for you cannot do
their jobs effectively.
• Don't cut marketing budgets so
no one knows you are still in busi-
ness.
Remember what happened
to Sunbeam when its chairman
downsized the company to boost
stock in the mid-'90s? Wall Street
applauded his actions at the time,
but within two years the company
was nearly broke. The chair was
fired and the company filed for
Chapter 11 bankruptcy protection
in 2001.
Slow down. Ignore all of the
pressures to achieve excessive lev-
els of profitability right now. Invest
in your future. If your business is
going to succeed in the long term,
you cannot eat the seed corn. In
doing so, you will have nothing to
plant for the future. Take the grain;
invest in crops; plant them and
watch your business harvest and
grow.
Robert Sher, CPA, is a certified executive
coach. He is former CFO for Schostak
Brothers & Company, Livonia. His e-mail
address is: info@bobsher.com .