Priority Cue

You can see the company is running out of cash, and all the steps you have taken to prevent this from happening are to no avail. You can see that there is no white knight riding to the rescue, no buyout coming, your credit lines are getting shut down, customers don’t care about paying you on time, and your key people are interviewing with your competitors. What do you do? More importantly, what don’t you do?

Think back to the reasons you started the business in the first place. Was it for glory? Was it to get rich? Was it to something that no one else was doing? Did you see the market opportunity and decide it was time to seize it? Was it to secure a strong financial future for your family? It was probably some combination of those reasons.

Through the entire process, you have learned a lot about starting, running, and building a business. That is a set of valuable and transferable skills very few people have. Wouldn’t it be great to be able to put those to use again? It would be a heck of a lot easier to start over if you have a strong and stable base of support on which to build. Read the rest of this entry

Worrying about the bad things that can happen as you run out of cash can be paralyzing, which accelerates the downward spiral. A proven way to break out of the self-reinforcing negative thinking trap is, paradoxically, to embrace it.

Think about what the absolute worst that can happen, and figure out how to counter that. Then do the same with the other potential situations. At the end of the exercise, you will have a complete list of possible steps that can be taken, many of which can be done in parallel.

What is the worst case – will you die? Read the rest of this entry

The owners and managers of the company should recognize when things are on a downward path before the vendors, suppliers, and workers do. When it gets past a normal business downturn, they should not be afraid to ask for help!

Just about everyone that is working at a company enjoys their job and wants to see it continue. Many times they don’t know that there is a potential problem on the horizon.  The owners may not want to tell the senior managers about their concerns, because it could be perceived as a sign of weakness, and because of the possibility that rumors could start spreading and key employees would start to leave like rats deserting a sinking ship. The thing is, most employees are savvy and are able to discern how things are going through the many clues provided by owners and senior managers actions. When it starts to get really bad, it is time to rally everyone around and all pull together. Read the rest of this entry

When business is good or cash is readily available, businesses can grow in many different and unprofitable directions. There is a temptation on management’s part to think that they are good at everything and the company should expand into adjacent lines of business or geography. Then when times get tough, all of a sudden this expanded operation becomes like a lead weight around the neck of the business. It is important to recognize when this is happening and take a serious look at what parts of the business are profitable and which ones are just unnecessary costs.

A friend of mine was put in charge of a venture capital funded Internet based business that had a breathtaking cash burn rate that gave them about 5 months to live. He took immediate yet measured action to identify what parts of the operation were profitable and which were just speculative. Furthermore, he identified which people were a fundamental part of the success for the things that were working.

After the assessment, Read the rest of this entry

When you are running out of cash and credit, one of the fastest ways to break the cycle is to get some new business in the door. Look at everything that you are doing for the sales cycle and see what is working, and what is not. Look for opportunities with your existing customers and prospects within the core business that you already do to see if you can get more. And look at how you are trying to close those deals to see if you can do things differently.

There should be a decent pipeline of new business that you can focus on bringing in and closing. And there is usually business that you can get quickly – it might not be very profitable, the work might be tough, and it could be risky, but at this point those are niceties that have to go by the wayside.

For any opportunities that you currently have in the pipeline, treat them like the proverbial Golden Goose. Watch them close and nurture them, because they are very valuable. I use the maxim of “Don’t Fail Alone” with my salespeople. When they are working on a big deal, there are a lot of things that have to happen to win it, and many specific milestones that have to be reached to be successful. Read the rest of this entry