Camels and Business in the dry times

No, I'm not talking about cigarettes, but those humped beasts of the desert.  The camel is an amazing animal that lives in the desert regions of North America and Asia.  It can withstand desert climates because it stores fat and water in its body, and some species can travel with as much as 1,000 pounds on them for up to 29 miles per day in the desert.  They also have calluses on their feet, knees and chest to be able to walk or sit on the hot desert sand. 

It has occurred to me given the dry, desert-like economic times we've had recently, it would be nice if business owners could call on reserves in the desert much like these animals.  Here are some things to consider while we're in these conditions.

C-Capital adequacy.  Leveraged balanced sheets don't work in this climate.  Make sure you have adequate capital.  Banks don't like much more than 75% debt, 25% equity.

A-Asset quality.  If you are carrying stale receivables that are uncollectable or inventory that won't sell, it may be time to write them off.

M-Management.  A good company will always have a balanced approach to sales and financial management.  Never sacrifice quality for quantity and vice versa.

E-Earnings.  Are there any aspects of your business, markets-products that are over or under performing others?  It may be time to retool and refocus.

L-Liquidity.  Cash is king, and it's important to have at least one month's sales in working capital to avoid a crisis.

Focusing on these items will surely help get you through the dry spells.