Stress Testing the Owner-Managed Business

Conducting a thorough stress test on an owner-managed business will determine strategic planning deficiencies and enable the success of the business. A stress test for a cardiac patient consists of monitoring the patient on a treadmill to see how well the heart reacts when placed under the stress of sustained exercise. A stress test for a structure involves placing it under a higher than expected load to see if it is as strong as engineering predicts. Financial regulators place banks under stress tests by using sophisticated software models that allow the testing of certain stresses alone and in combination with other events to see if banks have sufficient capital. These testing procedures consist of the initial inquiry, the application of the stress situation or situations, and an analysis of the performance under stress. It is not necessary to construct a complicated piece of equipment or a sophisticated computer model to accomplish a stress test on an owner-managed business.

The inquiry is to ask “What if…?” The application is to follow through the consequences of the event. If a probable event could occur in the marketplace, the application of the inquiry would be to forecast the business experience in the year after the event occurred. If the occurrence of the event will cause the business to lose money without recovery, the application of the inquiry causes the business to fail the stress test. If a business has three owners, the inquiry could be “What would the business experience in the year after the death of one of the owners?” Depending on the role of each in the business, the application of the inquiry would have a different result depending on which owner died. Would it make a difference if a certain owner quit owning because of disability instead of death? Most definitely, for example, if the buy-sell agreement is funded with life insurance, in the case of disability there would be no immediate funding from a life insurance policy. Would it make a difference if the owner left the business? Most definitely, for example, if the owner left to compete with the business and reduced the foreseeable revenue for the business. Would the application of the inquiry cause the business to fail the stress test under any of these inquiries?

While a computer model is not needed, there must be a way to project the economic activity of the business. Generally this can be the profit and loss format of the business accounting on a spreadsheet showing month-to-month performance for a year and allowing for adjustments. With some businesses it may be more meaningful to use a cash-flow format rather than a strict profit and loss format.

Where a probable event in the market will cause the business to lose money without recovery such that the application of the inquiry causes the business fails the test, the analysis and action required will be to anticipate that event with action to create new products or services for the market or find different markets for existing products and services so that the event no longer will cause a failure of the business. If the business cannot generate as extra cash the amount required to make payment to an owner pursuant to existing buy-sell arrangements within the term of time required for the payment such that the stress of one owner leaving the business in a certain way will cause the business to fail the test, the analysis and action required is to adjust the payment and terms of the owners’ agreement to more realistically reflect the reality of the business so that the owner can be paid and the business continue.

An important part of the review of a strategic plan for an owner-managed business is to start the stress test procedure by asking “What if…?” Do this many times. The more thorough the stress testing procedure, the better the plan will serve the future success of the business.

How Wedding Gown Preservation Works

It is no secret that brides exert much effort and spend many long hours in preparation for their special day. With all the attention on perfecting every little detail for the big day, most brides forget to think about wedding gown preservation.

Once you take your wedding dress off, you’ll need to think about where to store it. Wedding gown preservation ensures that your gown is free from all stains, dirt, and other particles that could discolor or damage your gown over a period of time. Proper wedding gown preservation also ensures that your gown is stored in an environment that is free from temperature changes, insects, mildew and mold.

Here are some common methods of wedding gown preservation:

1. Acid-Free Box
Using an acid-free box is a very popular method of gown preservation. In order to do this method yourself, you’ll need to purchase an acid-free box, as well as acid-free tissue paper. Some boxes have a small window where you can see the gown. Try purchasing these materials from your dry cleaners.

The first thing you have to do is remove all the fabric-covered buttons and pins found on your gown, then store these in a separate container. Afterwards, carefully fold your wedding dress, and place sheets of acid-free tissue paper between the folds. Place your gown in the box and it’s ready for storage.

Since the box is not sealed shut, the gown fabric is still able to breathe. In order to prevent your wedding dress from having permanent creases, make it a point to refold it every one or two years.

2. Cedar Wood Chest
Many brides also opt to keep their bridal gown in a cedar wood chest or closet. A chest or closet is a good place to keep your gown from light, while allowing the garment to breathe. Cedar wood is believed to repel insects, which is another reason it is a popular method of wedding gown preservation.

Keep in mind, however, that your gown will most likely smell like cedar wood after being stored for a long period of time.

3. Garment Bag
Another method of wedding gown preservation is the use of a garment bag. Although your wedding gown may have already come in a garment bag, this probably isn’t the kind of bag you should be using. You will need an acid-free and breathable garment bag, which is best for long-term storage.

Using a garment bag for your wedding gown is a very good way to protect it from permanent creasing, as well as mildew development. It also keeps your wedding gown free from dust and light.

These are just some of the wedding gown preservation methods that brides use. No matter which method you choose, be sure that it is stored in a climate-controlled environment. Also, be sure to inspect your wedding gown every few years to ensure that it is still in great condition. Oxidation spots often occur during the first year of storage. The sooner you spot these stains, the sooner you can have them treated.