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 .