Avionics News December 2014 - 49
if you don't purchase additional coverage, you're doing it
you also need value for your dollar. This means you're
purposefully and prudently.
not "trying to get your name out there," but instead you're
4. Ignore warning signs. Financials are boring and
promoting the benefits of working with your shop with
complicated, but they're the vital signs for your avionics
intent and strategy through a key message sent to a focused
shop. Review a monthly cash flow statement, balance sheet
audience. Use direct-response ads where you're asking them
and income statement - and know what they're telling you
to take the next step in the sales cycle, such as downloading
and how to fix red flags. Experts also recommend monthly
a white paper on estimating installation costs, signing up for
reports on accounts receivable, accounts payable, inventory
your e-newsletter or friending you online.
on hand and bad debt.
You have plenty of choices where to place this message,
Calculate performance ratios to identify trends in your
including local and regional aviation magazines, and flyingavionics shop so you can see when there's trouble looming
club or pilot-association newsletters.
on the horizon. These may include debt-to-worth, gross
Test each idea to measure success. Track responses with
profit margin and operating
unique Web addresses, coupons or
profit margin, inventory turnover,
quick-response codes for each buy.
sales, earnings before interest
Count how many leads turn into
and taxes, and working capital to
bids and sales. If it's productive,
While there are as many ways
total assets, and retained earnings,
expand it. If it's not, try something
among others. Your CPA can help
that works better.
to mess up an avionics shop
you determine which is most
3. Play fast and loose with
informative and then set them up.
insurance. You're not in complete
as there are shops to mess
Use a CPA as an expert set of eyes
denial about risk; you carry certain
for the company, too; by helping
coverage, including physical
up, these seven moves are
you analyze your books, he or she
structure and signage, personal
common business busters that
can help you plan a strategy for
and customer property, general
liability and worker's comp. Make
will efficiently do the trick.
5. Drown yourself in debt.
sure your policies are current, keep
Driving your avionics shop into
updated inventory and equipment
the ground is easy: just owe money
values, and meet all the terms
that you don't have. According to
of the policies, such as using a
a recent Gallup poll, more than one-third of small-business
monitored security system.
owners are uncomfortable with their level of debt, and
But according to property research firm Marshall &
nearly half say it's extremely difficult to pay it down.
Swift/Boeckh, three-quarters of U.S. businesses are underYet big debt payments cut traumatically into overhead,
insured by 40 percent or more. Indeed, rebuilding after a fire
marketing, inventory and wages.
may be frighteningly expensive, and covering customers'
Most of the generic debt-repayment advice from the
pricey aircraft may require excess and surplus lines beyond
Great Recession helps: quit borrowing; scalp the budget; get
standard business owner plans.
overdue customers to pay; ask creditors to lower balances
Your protection might need to go even further, too.
and rates; sell unused equipment; consolidate loans; make
Business interruption insurance will pay your bills until
payments out of personal accounts; and consult with
you reopen after a catastrophe. Other policies address the
reputable debt-management companies. Any may work, or
likes of employment practices liability coverage in case you
all may fail; regardless, first protect your personal finances
get sued over harassment or wrongful termination, along
wherever you're personally liable for loans. Then fix the
with data breech, professional and product liability, and
business. Your ultimate goal should be a cash reserve fund
directors and officers plans. You don't want to think about
that covers four to six months of expenses, as well as
this, but business crime insurance will make you whole from
savings for future investment in a capital expense fund.
Again, your CPA can help you determine such things as
Don't forget to protect your family. Life insurance
your current and quick ratios, two measures of your debt
will cover your business debts, and key-person insurance
will cover the impact of a vital staffer dying or becoming
Continued on following page
disabled. Consult with your attorney and agent to ensure that