This is a great question and should be on the mind of all entrepreneurs. In fact, I don’t look 5 years out, I just assume since I’ve been doing this for 35 years that things will be Okay. Think again.
Past performance is no guarantee for future results. So every day we look at the numbers and compare where we’ve been and where are we going.
Here’s a list of things I’m always watching to ensure the business keeps rolling along in spite of COVID and other things that are out of my control.
I am in the used technology and asset recovery business. The simple definition of asset recovery is I buy non-producing assets, usually in the form of used technology, and sell them to a customer base of over 30,000 and counting. This means any asset I find that fits my technology model, including new assets, I am a buyer for.
This does mean I will not purchase assets that are not related to technology like real estate, or undervalued public companies, but I do have a core competency in technology-related items like computer and mobile devices. My purchases are always big brand name items like Apple and Microsoft, to name a few.
So now we have that out of the way, let’s look at my list for how I ensure I’ll be around for the next 5 years.
Top 10 List
- Make sure revenue continues to grow.
- Stay healthy. I don’t drink or smoke and exercise. If you get sick then your company will suffer along with you.
- Watch profit margins and look for larger margins. If margins shrink then that’s a big problem.
- Keep a solid cash position covering three years of expenses just in case.
- Take advantage of cheap government long-term SBA loans. Add and increase bank and Fintech lines of credit even if you have plenty of cash and you don’t need them.
- Continue to add new suppliers and sources of income.
- Complacency is a killer. The number one destroyer of businesses is complacency. So focus and keep pushing for sales and profit growth.
- Look outside your core competency. Mine is used technology, but I have been looking at other categories that are niche-related like tools. I’ll test something when it looks like there is a demand and I can buy well below the market price, which’s less than 50%.
- Attack each day like it’s your first. Not easy to do if you’ve been doing it for almost 40 years but once you get lazy then the business will suffer. So always looks to grow and expand.
- Stay focused. Once you lose focus and control then your business will go down. There are no guarantees.
People always think that it will never happen to them. That’s when I know they’re in trouble. I have made and lost several small fortunes over the years for a number of reasons. When things were good, I never thought it would end. And just like that, it was over.
If you want to know just how fragile your business is, remember back to the oldest most prestigious bank in the world. Remember what happened to them.
Barings Banks was a British merchant bank that collapsed in 1995 after one of its traders, 28-year-old Nick Leeson operating in its Singapore office, lost $1.3 billion in unauthorized trades.
Founded in 1762, Barings was among the largest and most stable banks in the world. However, thanks to unauthorized speculation in futures contracts and other speculative dealings, it ceased operations on February 26, 1995. The direct cause was its inability to meet its cash requirements following those unauthorized trades. Even efforts by the Bank of England to arrange a rescue package could not avert the inevitable collapse.
Let’s not forget all those restaurants that have gone belly up because of COVID. Nobody saw that one coming.
My top 10 rules are no guarantee I’ll be around in 5 years but at least I’ll give myself a fighting chance if I stay focused and take care of the business that has taken care of me and my family for many years.
Mike Addis Mega Shop – Maddiscash