Crunch Time – Prepare For the Business Credit Tsunami

Gretchen Glasscock — Tue, 28 Oct 2008 15:45:11 +0000

Maria Bartiromo moderating a session at the World Economic Forum.

As we see the storm clouds gathering on the financial horizon it is a good time to brace your business for the economic fall out. I would break this down into 2 phases:
Preparation before the Tsunami
The most important advice for a business I learned long ago from a very successful entrepreneur who nearly went under several times, but each time convinced his board and investors to hang in and put in a little more money. He eventually sold his company to Pfizer. The product became Lubriderm. His advice: Never run out of cash. If you run out of cash, they take you out of the game.

So, when times get tough, as they are today, it’s a good time to get out the scalpel and make the tough choices necessary to cut costs. Here are some suggestions.

Keep overhead costs to a minimum. If you have a very expensive office and don’t have a long term lease consider scaling back or sharing office space, thereby splitting the costs. Many entrepreneurs and companies today don’t maintain an office at all and keep costs low with “virtual offices” and outsourced workers across the city or the globe.

Buy second hand. Scour estate sales, liquidations, sites like Overstock.com. Barter.

Forget support staff…. call don’t write… use your email…avoid paper.
Answer your own phone and dispense with calls in a few minutes.

Work until seven and eat a little later. You can do all your “support” chores after regular office hours.

Surviving the Tsunami Once It Washes Over You.

Swing into action the moment you start feeling the effects of the crisis and your back is against the wall. You must immediately communicate with everyone involved– whether vendors, associates or the general public —and tell them exactly what is happening and , at the same time, tell them the concrete, positive steps you are taking to correct things and restore a smooth running operation. Above all, communicate and keep communicating, particularly with your vendors who you want to keep on your side and empathetic with you. In a widespread economic shutdown where we’re all in the same boat they may be more sympathetic than you expect.
You may have to make decisions about which bills to pay and when. Remember, rent and utilities first.
You may even have to approach vendors about stretching out your payments. Don’t be timid or gloomy about approaching them. It won’t be the first time they’ve been approached about stretching out payments or working out a different payment arrangement unless this is their first day in business.

Remember: All business like all life is about change. This, too, will pass and good times will return.

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Crunch Time – Prepare For the Business Credit Tsunami

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