Sadly, many small businesses will fail over the coming weeks. To increase their company’s chance of survival, there are three critical steps that small business owners must take.
Continue to Slow Down the Outflow
The first step is to continue to find ways to slow down the outflow of cash. You’ve probably made some initial cuts, but there is always more that can be trimmed.
Look carefully at all expenditures and cut any that do not directly impact your ability to generate revenues, and generate revenues now. Most entrepreneurs think that many of their expenditures are an investment in their future growth. We need to recalibrate our thinking. Growth is likely a long way off for most small businesses.
Most economic forecasts are seeing a very slow recovery when it does happen, and there is a lot of uncertainty about when that recovery may begin. We may see a short-term bounce when things start to open up again, but it may only be temporary. Be cautious about opening up your spending again!
The V-shaped bounce-back is most likely not going to happen. Think of cash as a finite resource that needs to be preserved. This is no time to be timid when it comes to cutting costs!
Anything for a Buck
The second step is to find ways to bring in short-term revenues. Remember during start-up when you would do anything for a buck? Get back to that mentality. Don’t worry about strategy. Don’t worry that you might send confusing messages to your customers. They are likely in survival mode, too. There will be time to get back to honing your strategy later. Now it is all about cash!
The third step, once your cash flow is stabilized, is to think about what will be next for your business. Be ready to accept a very different future for your business than you had in mind just a few short weeks ago.
Consumers and businesses will behave very differently over the coming months and even years. Don’t be in denial about what you are seeing. Savings will become a national obsession in the coming years. Anytime we have a severe economic shock, people come out of it with a much more conservative approach to managing their money.
The fear of coronavirus may ease once there is a treatment or vaccine, but our collective psyche is likely to be altered for many years.
What we are going through is not just changing our economy, it is changing our culture and our society. Be ready to think differently about your value proposition and be ready to act boldly!
Cash is King
The moral of the story is simple. Cash is king! In fact, cash is king, queen, emperor, and president for life! This is not a new truism. However, it is now the most important principle in business.