Adjust your goal.
Your goal should be survival. This means preparing for the worst and hoping for the best. Take all experts’ projections with a grain of salt. TV shows will have economists and astrologers with predictions No one knows. After this pandemic passes the chimp who throws the dart closest to the right answer will boast about his/her accurate forecast and will be feted. Right now, no one knows. So be as conservative as you can.
Re-do your projections now and every week.
Everything has changed, especially your revenue assumptions. Develop new assumptions. Stay in touch with your customers (if you can) and make conservative forecasts. Seek flexibility. Do 13-week forecasts and update them every week. Even if you have to shut down, make projections of your cash with zero sales.
Cut your labor expenses.
Talk to your employees, they may be willing to share the pain and help you cut expenses so long as they know that they are not being used. But this is not the time to be a martyr. You can be the noble entrepreneur and keep your employees at the expense of your cash and cash flow. But don’t expect your financiers to do the same unless the government has agreed to fund you. You may be able to do long-term good for your employees by staying alive, not by failing.
Cut all overhead.
If you have expenses that do not earn an immediate cash return, get rid of them. You may be able to undo this after you start to rebound.
Cut research and development that may be needed for the long term but are a cash sieve in the short. If you fail in the short term, they will not be of much use in the long term.
Do barters and sale-leasebacks.
See if you can barter for your products or services and hoard cash. Sell any fixed assets that have good value, especially if you have depreciated them. And do a leaseback if you want to use it in the future. Negotiate with the buyer for delayed payments to help you get back on your feet.
Look for emerging business opportunities. Along with cutting, look for new opportunities that you can seek with minimum cost. Car manufacturers and others are looking at making equipment that are needed to serve corona patients. See if you can do the same.
Look for emerging trends.
As I have noted in a previous blog, the virus will have long-term implications. Telemedicine and online education were emerging. This will be the spur that will put them on the growth path. I am sure there are other emerging opportunities. Get on these so that you are not just cutting, but also looking for growth to keep any remaining employees occupied.
Look to merge.
You may find that some weak hands want to sell.
Or if you are the weak player in your industry, consider merging with the right partner. You may get a good price if you are the buyer. And you may get more than you would in a bankruptcy if you are the weak one. As an example, this might be the time for Uber and Lyft to merge. They will both benefit.
Cut product lines and customers that are not carrying their weight, i.e. not offering immediate positive cash flow. Or where you can use the assets for more productive uses. Or get more cash flow. Or sell for cash. They may have outlived their useful life, or they may be for the future. But as noted earlier, if you are not around in the future, they will not be useful.
Talk to someone who may be more objective than you. One of the benefits I had when running the turnarounds was that I had no sentimental connections to anything related to the existing business. Get a hard-nosed person who can ask you the tough questions. And listen to good advice.
Rank the strategies in terms of immediate cash and cash flow benefits, and minimum long-term strategic costs. This is the time to get to the core of your business.
Where is your long-term advantage? Cut everything else
Prosper your Business, Outsource with WeMng!
#wemng #JoinWeMng #Integrity #Knowledge #Accountability #TeamWork #HR_Business_Partner #Outsourcing #Business #Egypt