Yes. Size Does Matter

The Big Box Stores do it. FedEx, UPS and even the stodgiest, lumpiest institution of all, the U.S. Post Office all do it. It’s 21st century agility, it comes in all flavors, shapes and sizes and it goes by the common name of “scalability.” Is your business scalable? What does scalability even mean?

The key to understanding scalability lies in its purpose and applicability to your enterprise. Seasonality is a major driver of the concept and the savvy retailers – from the big box chains to the small box movers – understand the crucial need to augment staffing to meet the surge demands of the Christmas selling season. Even the Christmas tree business owner ramps up for this limited selling season, only to go dormant for the remaining 11 months of the year. Economic conditions, current events and even emerging trends also have a say in the how and why of  scalability.

One might argue that farmers invented scalability in response to harvest time. In its purest form, scalability represents the instantaneous capability to increase or decrease capacity, volume or throughput to meet prevailing market conditions, while optimizing overhead expense. Scalability takes on many shapes, sizes and forms because it’s difficult, if not financially impossible, for a capital-intensive industry such as an automaker to add additional production lines and idle them as car sales fluctuate. Yet that same automaker can staff three shifts or scale their lines down to one shift to meet demand.

As a small or medium size business owner, it’s likely you understand and already implement scalable to your business model. Inventory, staffing, locations, business hours, virtually every attribute of your business is scalable in one way or another.

The question you should ask is whether or not you are fully considering all the opportunities to apply scalability and leverage economies of scale. While staffing, hours and inventory remain the most visible candidates for scalability, others aren’t so obvious.

For instance, do two part time employees give you enhanced scalability over one full time equivalent? The full time employee perhaps depends upon full time employment to make ends meet. Reducing that employee’s hours during slow periods may create undo hardship. Two part time employees may give you the flexibility to save on payroll by discharging staff early during slack periods. Conversely, part time employees may accept additional hours during peaks, sparing you the expense of an additional full time equivalent. Part time employees also aren’t typically entitled to a full time employee’s benefits package.

Whether your business is retail, service, business-to-business, manufacturing or industrial, opportunities for scalability exist. Have you found them all?

Think Fast

One of our most frequently asked questions is, “What can they take?” Most of the time, the call comes from a panicked business owner in the midst of a collection action. To answer, let’s consider an all-too-familiar scenario where a small business owner ignores past due invoices and repeated phone calls from a creditor attempting to collect a past due balance.

In a final act of futility, the creditor turns the matter over to a collection agency or in this case, the Sheriff’s Office. The collection effort has just escalated. In the mean time, the debtor experiences a false sense of relief as the collection attempts cease while the legal wheels turn.  Then, at the creditor’s discretion, the Sheriff pays a visit.

In one variation of this scenario, the business owner not only ignored repeated collection attempts by the creditor, but also disregarded registered and regular mailings from the Sheriff serving notice of intent to collect. This also included a missed opportunity to declare “Exempt Property” from the collections action. Sadly, that omission just gave the creditor the opportunity to seize any assets necessary to retire the debt. Up to and including tools, fixtures and equipment essential to business operations.

By ignoring these important notices, the business owner waived the opportunity to identify and declare all assets that are legally exempt from a collections action. If ever faced with collections, it’s crucial to know exactly what property is exempt from seizure. It is important to note that laws vary from state to state. For this discussion, we’ll consider a few basic examples that must be verified for each state.

A form of transportation and a home would be considered examples of Exempt Property. Also, tools of the trade are protected under the general premise that a tradesman or professional can no longer generate income without certain assets.

The best course of action, if you feel you’re facing a collection action, is to literally take stock in what you own, determining what tools, assets, fixtures and equipment are essential to conduct normal business. With that list in hand, search online or contact an Emerge180 Commercial Debt Restructuring (CDR) Specialist about Exempt Property laws in your state. Then – if the time ever comes – disclose all assets, even if they’re exempt. The discovery of undisclosed property undermines any remaining good faith and compromises your ability to negotiate a more favorable settlement.

Knowing what property is exempt goes a long way to peace of mind.