By Bernie Dixon
You are navigating an uncharted journey for your company. With so many unknown factors, unprecedented issues to maneuver through and leadership topics to handle, it is challenging to steer through this national emergency without a map. It’s time to get back to the business fundamentals in order to extend your runway and for your company to survive. Here’s a few no bull survival tips and must do’s:
Slash costs. Most likely, your business revenues are being impacted significantly. You probably are faced with revenues dropping off more rapidly than you can cut your expenses. Your expenses may be growing to support a remote workforce, acquiring new tools or providing extra customer support. Now is the time to quickly and preemptively cut costs. Address the cost cutting before you are in a dire operational mode. Think about surviving with less overhead costs.
Trim personnel costs; maintaining only essential labor costs. Shedding non-essential people and services or using part time replacements is necessary.
Reduce operating expenses. Are you on a month to month lease for office space? Can you suspend your office costs with so many employees working from home? At least, can you renegotiate a lower rate?
Reduce inventory and associated carrying costs. Can you sell off inventory even at a discounted rate?
Reconsider capital raising. Investment capital grows scarce in times of uncertainty. You cannot depend on an infusion of capital at this time. Consider:
Delaying the current round
Offering an inside round
Consider friends and family sources of capital
Reexamine current debt structures. With interest rates at an all-time low, it’s time to reassess your loan structure. Is your lender able to provide a new loan with better rates or extended terms? Is it possible to exchange debt for preferred or common equity?
Identify key talent such as employees and contractors. You know who your high performers are and the key talent your business needs. Communicate your confidence and reliance on them. Offering increases in equity or options can be an award tool well worth considering for those you want to retain for the longer term.
Preserve cash wherever possible. This is not a time for experimental campaigns or non-core product development. Keep your cash on hand for as long as you can. There is no indication of how long a depressed market will last. Now is the time to get to an operational break-even point sooner versus later. You will be in a better position to survive and even rebound with the return of more stable markets.
Communicate. This is no time for a CEO to hide. Err on the side of over-communicating. Be visible on-line. Communicate to your employees, customers, Board, suppliers and partners.
We’ll have more on that tomorrow. Watch for LP2X Communication Tips for Survival and other on-point messages in the next few days. Connect with us directly with your questions or suggestions.
Play to Win.
Bernie P. Dixon is Founder and Chairman of Launchpad2X, a founder-to-CEO accelerator training program for women entrepreneurs. Find her on LinkedIn.