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The Leveraged Capital Newsletter,
sponsored by Graham Financial Corporation
(http://www.GrahamFinancial.com),
is a free monthly newsletter that presents growth You are receiving this newsletter because you have requested that we send you our monthly editions. We do not believe in "spaming" anyone. Your time is valuable and if you have received this newsletter in error, please let us know. If you do not want to continue to receive Leveraged Capital please see our unsubscribe instructions at the bottom of this edition.
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with the word "subscribe" in the subject field.
In this months inaugural issue:
========================================================= Welcome to the Leveraged Capital Newsletter. Our goal is to provide you with timely and informative articles about growth and strategy issues effecting entrepreneurs and small to medium sized companies. Each month Leveraged Capital will deal with issues affecting your business. You will be able to read topics ranging from finance, human resources, buying companies, selling your company, and technology. In coming months you will read profiles about other entrepreneurs and current decision makers. We will keep timely content levels high, advertising content low, and welcome your feedback. Are you interested in contributing articles?
Or, do you have an interesting and unique story to tell about your
company? We would like to interview you. ========================================================= Your Dot Com Is Not Gone. Now What? We have all
read, some even recant the stats with glee, the carnage that is ravaging dot-com companies today. Simply open up any business paper and look for
last years hottest IPO or technology that was so hot it has gone up in flames.
Many firms are struggling to make last weeks payroll, let
alone make a profit. But you're still open for business. Your migraine quotient has increased, you're slightly
bloodied from the recent carnage, but your office is still open.
Now what? For starters, put
thoughts of IPO riches on the shelf for the moment and stop relying on
spreadsheet magic; it’s time to focus on what you set out to do.
Scenario 1.
You pull out the stained wrinkled paper from under your mouse pad, or you ask
one of your partners if he/she has the plan somewhere.
Your “plan” consisted of massive losses for three years
followed by positive cash flow as a result of the next best IPO. Use this business plan to
save heating costs and use it to light kindling in your fireplace.
Chances are your company is dot-gone
and some of your options may include
moving back in with your parents. Scenario 2. You actually have a plan that leads to a path of profitability because of your technology, service, or product. You are not reliant on an IPO or spreadsheet tricks. Take it off the bookshelf and re-read it. A business plan is not a static piece of literature. By the very nature of your business environment, your business plan should be dynamic and reviewed at least each year. What have you managed to achieve according to plan and how? Where did you fall short and why? What needs to change? If you can't answer these questions you will need to. Very soon. If you are not asking these questions, chances are your investors and/or banks will. Very soon.
========================================================= Quick Stuff: Numbers On The Edge - The Altman Z Score. The Z Score was originally created at New York's University by Professor Edward Altman as a ratio to predict bankruptcy. The ratio has it's short falls and has been revised over the years but can be a useful ratio tool. It can be used to predict bankruptcy, and is used by credit officers to gauge credit applications but it has some interesting applications for business owners. The Z Score can assist owners in identifying needed areas of focus such as reviewing existing lines of credits with banks, identifying unprofitable products, improving asset management, assessing various cost-reduction programs, and highlighting the effect of increased sales on the company. Altman used these four variables for private firms with assets over $1 million:
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