Fourth Quarter – a Lesson

It is devastating to know that all you have been doing throughout the year was balancing a delicate house of cards. You cannot control the blowing winds now and all you can to do is watch it collapse. Businesses, especially small ones, shut down in large numbers in the fourth quarter. The company gets exposed to vulnerabilities like tax payments and market position; suddenly in the public domain, it finds difficult to find its place in the vast industry. Let us find some specific reasons of the failures –

Over-estimation

You will be reminded of your previous 4th quarter here. It breaks you only on an emotional level if your estimated profits do not materialize, but it shakes your financial stability if you borrow or delay payments relying on this non-existent profit. Always remember to be prepared on the basis of the worst case scenarios.

Absence of Back-up

A business house has to have a rainy day account. Your savings is also a parameter to measure your profit. This saves you from any credit payment as well as absorbs any fluctuation with regard to tax payment or estimated inflow. Always invest in yourself; investing profit amounts in other avenues may lead to an existence crisis in tough times.

Stagnant Analysis

Market analysis is not an annual activity. You can set your goals and targets on annual basis but they need to be checked periodically against changing market situations. If you are not aware of current market trends, you are trading today with yesterday’s figures. Most businesses are aware of the changing trends, but they seldom look at these as fundamentally altering company policies.

Poor Resource Planning

Time, money and employees are your resources. Being late on your delivery timings, on your schedules can cost you dearly. Your clients consider their policy decisions in the fourth quarter. So your business has the risk of losing a client if you have not been prompt throughout the year. Money, as discussed above, needs to be organized at the end of the year. Your employee strength also needs to be evaluated. Having deficiency or excess can incur losses.

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