OK, Jeffrey – what are YOU doing about the economy?
I’m sitting having a bagel with my friend, Rex Eagle – an artist, a business consultant, and an exceptionally creative and insightful person. We’re friends, and meet once a week or so to talk about the world – our world.
Rex asked a seemingly superficial question, “What are you doing about the economy?” As I began to answer, I realized I was doing a number of things worth sharing with you, so I documented the entire conversation.
NOTE: For the past 15 years my business (probably like yours) has done nothing but grow. But all of a sudden (probably like yours) it hit a snag. Volume, cash, fixed expenses, and unlike big business, no bailout – or should I say, I’m my own bailout.
The list below contains both business actions and money actions, and they are actions I took the moment I felt the business world, and my world, was in jeopardy.
Here’s what I have done to date for my business and myself:
• Eliminate my own salary. The first move of a true entrepreneur.
• Cut every unnecessary expense. Line by line. Item by item. If I didn’t need it, it went.
• Based on numbers, cash flow, and predictions, I cut staff. Quickly, honorably, openly.
• Preserve morale. Train attitude for all remaining people. Leave all morale benefits and long-term benefits in place. NOTE: Internal cutting reduces morale to zero. Cut people, not salaries. If you must cut salary, cut your own first.
• Create a small internal “trust” team, and meet as frequently as necessary. I put as much family and other insiders on the team as possible to help figure out what is best for the business.
• Study and continue to study money numbers. I make certain that I have a mini financial picture of my company every Monday. This gives me peace of mind, and warns me of any actions I need to take THAT DAY.
• Predict cash flow. I know what cash is expected over the next 90 days. This way I can have a realistic idea of what REALLY needs to be done. It’s NOT a “burn rate,” it’s a snapshot. And a planning tool. People who post “burn rates” expect to die. I expect to live, thrive, profit, and succeed. Burn rate, a term invented in the dot.com era, contains two of the most negative words ever perpetuated in business. And incidentally, most of them burned.
• I immediately became closer to our sales and the selling process. No one has ever cut their way to success. I became sales manager, and began getting and giving daily feedback.
• Forecast sales. While selling cycles ALWAYS take longer than predicted, this is a way to help predict new money.
• I talk to my customers to get a feel for their market. This gives me a cross section of information, and helps me get a realistic picture of…
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