Making Bold Decisions: Tips to Avoid “Decision Paralysis” and Ensure Long-Term Business Survival

Several years ago, a survey by the Receivables Exchange identified significant concerns for small and midsized businesses, identified as companies with annual revenues between $2 Million and $200 Million.  The study involved business challenges, including working capital and cash flow issues.

Among the highlights of the study were the following cash flow challenges for C-Level management at the companies surveyed.

• Securing reliable working capital in sufficient quantities was the number one challenge, (no surprise here)
• Most respondents wish they had a more significant cash cushion to fall back on
• Restricted capital standing in the way of business growth
• Restricted cash flow had a devastating ripple effect on the companies Supply Chain

These challenges are going to be even more of a concern as we move into the second half of this year as well as into early 2021, primarily due to the uncertainty of Covid-19 and what that will mean for these small and mid-sized businesses.  One thing is for sure; lack of a clear plan on how to improve cash flow and protect a company’s supply chain will ultimately cause the demise of many of these small and mid-sized businesses.

The uncertainty of what lies ahead mirrors the “Great Recession” era dating back to 2009.  At that time many business executives suffered from what we called “Decision Paralysis,” which is the failure of corporate management to make bold decisions by moving away from the status quo and challenge their company’s current operations.

Oftentimes, corporate executives feel that “if it ain’t broke don’t fix it.”  Well that may be true most of the time, but it’s certainly not true now and won’t be for the foreseeable future.  You see the challenges posed by the uncertainty of Covid-19 need to be addressed on an almost daily basis.  One thing is for sure “He who hesitates will be lost!” 

A key area of business analysis that must be dealt with in these uncertain times is constant business measurement. The need to Measure, Measure, and do more measurements cannot be understated.  Measuring needs to be done in conjunction with continually looking at Reducing Expenses wherever and whenever possible.  And doing it without eliminating the company’s ability to provide the goods and services it needs to survive.

Here are a few suggestions for each of these core areas:

• Make sure all budget items are within the range as set out in the corporate budget; continually assess those budgets are they realistic?
• Immediately make necessary adjustments wherever and whenever possible
• Ensure that there are competent audit functions in place for all areas of the business, especially the supply chain and logistics areas
• Utilize outsourced audit firms to back up and support in-house audit functions
• Continually benchmark all logistics and supply chain costs and services; again, utilize outsourced logistics experts to support this vital function
• Constantly track and monitor the ongoing changes to freight carrier pricing agreements, including new surcharges that are constantly applied to freight shipments; evaluate your options to either re-negotiate carrier pricing agreements for relief, or change service providers if necessary
• Remember, everything is negotiable if you know what you need and how to get it.  And, if you don’t, reach out to the experts who can guide you on a path to success.

It’s time for business executives who struggle with decision paralysis to take a step outside the box and leave their egos at the door.  Take the initiatives that need to be taken in the best interest of the company to ensure its long term survival.