Preventing Long Term Losses

Preventing Long Term Losses

What business or organizations fear the most is not losses incurred in an accounting period, but what they fear are long-term losses. It is difficult if not altogether impossible to recover from a long-term loss. By that time, business or organizations resources have been bled dry and outsiders would just be too happy to look, not to help. Financial institutions and venture capitalists would be hesitant to revive such business or organizations for the simple reason that success no longer is in its favor.

Long-term losses are the result of short-term losses “instant surprises that the business or organizations experience over time. Intelligent planning and strategy dictates that short-term losses must be corrected immediately so that it does not transform itself to long-term ones.

A classic example is the airline providers in island nations of Asia and even in the Americas. It is common knowledge that water transportation is cheap but it is slow. Then came the fast crafts, twin-hulled catamarans with speeds up to 40 knots and with interiors like that of airplanes, charging a third of the airline rate. The result was an initial short-term loss but many airline providers assumed that customers would patronize the airline again due to a respectable time differential. They allowed such losses to become long-term ones. This has resulted in the rerouting of many airline routes if not the bankruptcy of many small airline providers.

The prevention of long-term losses is the backbone of intelligent planning and strategy. Intelligent planning and strategy is not so much concerned about the short-term although that is extremely important. But intelligent planning and strategy is concerned much more with the long term; that the business or organization can steer itself towards the future, in good financial health, and prepared because it has done its homework.

Providing Timely Alternatives

When business or organizations have been caught by surprise and they have suffered a mix of short-term and long-term losses it can be a difficult time to search for timely and appropriate alternative choices of action. They may get caught up putting the fire in one room and not notice that other fires have started in different departments in the business or organization.

The design of timely alternatives is the specialty of intelligent planning and strategy. Intelligent planning and strategy assumes and anticipates that there will be problems, there will be surprises, and there will be short-term losses. As such, an alternative is already prepared for any conceivable eventuality that business or organizations may encounter in a given period that is included in its intelligent planning and strategy.

For problems involving accounts receivable and cash flow, the intelligent planning and strategy team may pre-select and pre-transact with banks and financial institutions so that when these eventualities occur, no time is lost.

For problems that may involve business or organizational personnel, an outsource partner in the temporary job industry might be prepared in advance in case some personnel figure out in an accident or illness.

For problems that may involve distribution of goods, a pool of outsource partners might be on standby to prevent the stoppage of the flow of goods to customers and potential customers.

In instances when the alternatives might seem to be elusive or unforeseen, the team or group of people involved in intelligent planning and strategy should be on call to brainstorm for the solution or alternative. Time is always of the essence in such circumstances. An armed conflict might arise in a territory where the business or organization has a strong presence and these may place it in a position of uncertainty. Alternatives have to be drawn in the shortest possible time.

Question upon question have to be asked in order that all possible alternatives might come to the fore. Questions like: is the present government in danger? Is the opposing party friendly? Is the conflict manageable? Is shutting down an option? Intelligent planning and strategy is and will be the only alternative that is timely.