1. Talk to people – Don’t assume
Talk to your customers
- Ask how the current situation will impact them.
- Ask how you can make it easier to keep their business
Talk to your vendors and suppliers (Look at point #2 before you do this so you can combine discussions as you see fit).
- Will they need to change terms?
- Tell them what you’re going through so they aren’t suprised
Talk to investors
Talk to your bankers
Talk to Employees
Talk to your spouse and family
2. Cut back – conserve cash. Think of cash flow before profit.
Do a line item inventory. Go through your P&L statement and stop spending on anything you don’t absolutely need. For everything else, call up your vendor’s and renegotiate.
Cut back on employees last (unless there are some you should have let go anyway – and this is true for many companies)
- Be sure to explain to employees what they can expect. They’ll expect the worst if you don’t and you may end up losing people you want to keep
- Maybe we call all cut back on hours so as not to lay anyone off
- Maybe we can cut back on some pay or benefits – start with yourself (and since you’re talking to them – see #1 they’ll understand.
- Maybe become like Toyota – Invest in your employees.
- UPDATE: If you can’t be like Toyota and find you do have to lay people off read this by Guy Kawasaki about how to do it well.
Cut back on Marketing second to last. The stronger you market in the down times the better position you are in
- A) you’ll be more likely to get a bigger share of the business that is still out there
- B) you’ll do better faster when things turn around as your weaker competition is gone
- C) perhaps you’ll find ways to get into markets you haven’t had before
Cut back on prices as necessary. Understand where your break even is and what your marginal costs are. It may be smart to take some jobs or sell some product just to keep your staff employed. Be flexible.
3. Look for more ways to get more bang for your time (you thought I was going to say buck didn’t you? – you did that in #2 if you were paying attention).
Takeaway:
- Plan for the world not to end. If it doesn’t you’ll be in better shape for planning and if it does, your planning won’t matter anyway.
[tags] CEO, entrepreneur, recession, small business, economic melt down [/tags]
