June checkup can help ensure your firm is healthy

It’s time for a midyear checkup.

Stepping back to take a careful look at finances and operations can help a small business determine how well it’s managing costs and making use of sales opportunities.

It’s a smart thing to do any time, of course, but midyear is a good benchmark.

“Business owners need to give themselves a break,” said Christina Cardenas, president of Cardenas Insurance Services Inc. in Rancho Cucamonga, “give yourself time to make some adjustments.”


After several years of battling through the recession, a lot of business owners “are burnt out because we are having to wear so many hats,” she said. In part that’s because of smaller staffs at many firms.

Setting aside time to work on the business, rather than within it, can pay off in creating a more efficient, profitable operation. And possibly fewer hats to wear for the owner.

Cardenas took stock halfway through last year and ended up streamlining operations when she realized the vision she had for her business was not matching its reality.

She had to take drastic steps to cut costs, including laying off two of her six employees. And she made two of the remaining posts part time.

But Cardenas said she also focused on ways to grow sales. She invested in new software that let her produce quotes faster. And she made sure every employee was directly involved in sales and customer relations.

“I don’t have room for someone to just sit and do clerical work anymore,” Cardenas said.

Taking time out to evaluate a company’s progress is not just for struggling firms.

At Sweis Inc., a Torrance wholesale distributor of beauty supply products, owner Karl Sweis is expanding by opening retail outlets. His second store, in Lake Forest, had its grand opening this month, and he plans to open two more by the end of the year and five next year.


He examined the operation to find ways to free up money to fuel the growth. One place he found it was in his warehouse.

“We’re taking a look at inventory, things we are not moving,” Sweis said. Among other measures the company took to deal with that situation, it began donating slow-moving stock to cut back on inventory. That saved on taxes too.

Some companies find, as a result of stepping back to examine their operations, that their once tried-and-true ways of doing things are no longer serving them well.

“Every business has changed” in the last couple years, said Mark Patrick, sales director at Expense Reduction Analysts Inc. in Carlsbad, Calif. The company offers consulting services to help streamline operations. “If they didn’t have a need in the past,” he said of businesses trying to find ways to cut costs, “they may have a need now.”


But for some small businesses, the best single step they can take to improve operations is to implement basic accounting and financial procedures, said David Wandrey, principal at Manhattan Beach-based IMPAC Consultants Inc. Without those, it might be hard to do a worthwhile checkup.

“To do a checkup, it assumes you have a lot of things in place to check,” Wandrey said. “Based on my experience, just about every company I go into — especially these guys with $5 million, $10 million in sales — they don’t have a lot of basic things in place.”

Using software and other systems to track dollars daily, rather than relying on an owner’s guess, will make it easier to keep tabs on the lifeblood of any business: cash flow.

“Making sure you have a strong accounts-receivable process has taken on a whole new level of importance in businesses,” said Tammie Calys, president of Transformation Management Consulting, based in Leesburg, Va.


“It’s one of the primary areas now that all businesses, regardless of size, are focusing on.”

But the first step is to simply take stock in how the company is functioning, even if it could lead to difficult decisions.

“People are afraid to change,” Cardenas said. “I’d wish I’d done it six months earlier.”