Managing Director | Chief Executive Officer | Automotives | Manufacturing | Engineering

What To Ask Yourself When Your Business Is Going Through Hard Times

Written by: Ram Parthasarathy
About the author: Managing Director | Chief Executive Officer | Dynalec Controls Pvt. Ltd. | Automotives | Manufacturing | Engineering


When times are good, businesses get by with a lack of systems and controls, and owners think everything is OK with their business.  And when a downturn comes along, panic sets in.  Here are some questions to ask yourself when facing hard times, actually even if times are good.

This is a list of questions which every business owner or management needs to ask and answer as objectively as possible.  The answers will directly point to weaknesses in the business, and solutions will become suddenly visible.

Corporate Management and Strategy

  1. Do you have a structured 5 year business plan detailing product sales, markets, likely costs, opportunities and risks, 
  2. Do you have a detailed budget for every fiscal year, which is prepared at the end of the previous year?
  3. Do you plan for and make provisions for capital expenditure?
  4. Do you have a performance Management system in place, and is it implemented objectively?
  5. Do you track market trends and adjust your future strategy in order to maximize opportunities in any scenario?

Sales and Marketing

  1. Do you have an interactive website?
  2. Do you track sales product-wise and value wise on a daily or weekly basis?
  3. Do you know which your top selling products are (10%)?
  4. Do you know which your weakest selling products are? (10%)
  5. Do you have a plan in place to phase out your weakest products?

Cash Flow

  1. Does your finance department prepare a cash flow statement on a weekly basis (current plus next week’s  projection)
  2. What are your debtors to turnover ratio?
    a.    >50% Very bad
    b.    25-50%  Needs improvement urgently
    c.    10-25% Can be improved, but not bad
    d.    <10%  You’re in great shape
  3. What is your inventory to turnover ratio? The same ratios apply as for cash flow.
  4. Do you have a structured system of tracking debtors’ aging and regular reminding of customers for payment.
  5. Do you pay your suppliers as per the negotiated credit period?


  1. What is your sales per employee? Is it at least seven times the salary you pay?
  2. Do you have any measure for employee productivity?
  3. Do you have a Daily Work sheet system for your employees, which is tracked by your Production Managers?
  4. Do you have an organization for customer service and support?
  5. Do you have a system for analysis and rectification of customer complaints? Do you do root cause analysis to eliminate the reason for a problem?

Management and Culture

  1. Are you a leader or a boss?  Do you demand respect from your employees or do you earn it by your behavior and actions?
  2. Do you insist that your employees give respect and courtesy to each other?
  3. Do you have an equitable gender ratio? Do you have a documented HR Policy in place, which includes a Sexual Harassment policy?
  4. Do you have a system in place to address employee grievances?
  5. Do you have Health Insurance for your employees? Keyman Insurance for important employees?

Low Hanging Fruit

In times of trouble, focus on these areas:

  1. Prioritize collection of funds.
  2. Renegotiate credit with suppliers
  3. Try to maximize revenue rather than cut costs.
  4. Identify loss making products (even if they have very low positive margins, they take up capacity which could be better used by higher margin products) and stop making them.
  5. Put aside 10% of every inflow into a contingency fund.
  6. Maintain a good relationship with your bank.  Even in bad times, if the bank has confidence in you, they will likely support you.
  7. Hang in there, do the right things, and the situation will invariably improve.

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