Entrepreneur to Entrepreneur: 6 Things You Can Do Now To Stay Afloat
May 1, 2020
Almost all of us are under a lot of stress and we’re scared. It’s understandable; COVID-19 has pulled the rug out from under us all. As entrepreneurs, we’re no strangers to change and adversity, so now is the time to do what we do best- manage risk and overcome obstacles.
Time for some real talk today, Entrepreneur to Entrepreneur.
Cash has always been king for any business, but thanks to the COVID-19 fallout, it’s dwindling for an unprecedented number of businesses. While all businesses should be conserving cash, those in the “danger zone” (sales/cash drying up and little in reserve) need to be as decisive in reducing their cash burn as they are diligent in bringing more cash in.
Avoiding “throwing good money after bad” is critical to weathering the storm.
As an entrepreneur with over 20 years of experience in startup and small business ownership, I have lived through the dot com bubble burst, the Great Recession, and now COVID. I have had businesses flourish and businesses fail, and a few somewhere in between. I’ve amassed plenty of “scar tissue” along the way.Back in 2008, I had a successful business fail during the recession largely because we were too slow to cut our cash burn and pivot to other ways to generate cash flow. A few years and another business later, when faced with another market contraction, I didn’t delay. Cutting expenses to the bone and adding a new line of service not only saved my bacon but turned out to be far more profitable than the original services were.The choices you make now can have an incredible impact in the coming months. I say this not to scare you, but to empower you. You still have choices and a measure of control, but the window of opportunity will close quickly.
So, to all you business owners out there who are struggling, here’s my hard-earned advice:
- Act now. Many businesses wait too long to pull the trigger. Get real about the situation and acknowledge the need to act, and fast.
- Immediately cut cash-burn. Determine what costs can be cut today (non-essential workers, subscriptions, 401K matching, non-revenue producing expenditures, etc.) and trim them out. Once the storm passes, all of this can be phased back in.
- Negotiate with creditors. Call up the people you owe money to and ask for delayed/forgiven payments. This will buy you time and help control your overhead.
- Reduce payroll to the absolute minimum. Everyone wants to do right by their employees, but it’s far better to temporarily furlough staff now to give them a job to come back to later.
- Liquidate any non-essential assets. Are there things lying around unused (equipment, inventory, tools, etc.) that could bring you cash? Sell them.
- Generate more cash. Pivot channels (ex. retail to online, delivery service). 2) Add new offerings (ex. make masks, consult /side hustle, etc.). This is the time to flex your creative muscles as an entrepreneur. Go left when everyone is going right. Zigzag.
For ideas and inspiration on what other companies are doing, apart from securing loans/grants, check out this recent article. You still have choices, as many businesses are showing.
Last but not least, don’t go it alone.
Reach out to the people who are rooting for you and want to see you succeed. Get the counsel of those who’ve gone before you and successfully weathered similar events. An incredible resource (that’s free!) is your local Small Business Center. Now, more than ever, you need to surround yourself with people who have walked in your shoes and can offer actionable advice and support. Find and connect with yours below.
Finally, imagine your life a year or two down the line. The swift decisions you make now could make the difference between a business that lives on without amassing massive debt or depleted savings and one that closes.
There’s still a lot you can do. So get going!