PROSPER OR PERISH #7 by Stephen Gross. Click here to read past issues.
As we begin to see government relax the shelter-in-place guidelines, we receive funding from the PPP, while waiting for further funding from 7(b) EIDL program, we now face the prospects of, WHAT NEXT?
It goes without saying the “plan for the worst, hope for the best”, is good advice today. We can expect, at the best, a slow resumption of activity, building back over time to some “new normalcy”.
As planners responsible for the survival and health of our businesses, we must look at every aspect of our company, and ask ourselves these questions – Is There a Better Way to Operate with Less Fixed Overhead?
Outsource all activities that are not core and essential to your business.
- Accounting and administration – unless you are in the accounting business, you should not manage an activity that others are more expertly trained to provide.
- Marketing and Social media– Unless you are an expert, tap into the numerous qualified digital marketing professionals.
- Maintenance and repair – In most customer service areas, service companies will provide responsive support on a contract basis lowering your need for expensive trucks and equipment.
- HR, personnel management, and payroll – One of the most mature outsourcing areas, payroll services, (or Professional Employee Organizations) provide quality services for you.
- Finance and strategy – add outsourced experts, virtual CFO’s, industry specialists, to help with funding (debt and equity), forward cash flow planning, and building for-value strategies.
Negotiate all fixed overhead contracts for “concessions in an emergency”.
- Rent – contact your landlord and pursue rent concessions or modifications to give you time to recover cash flow.
- Loans, mortgages, and investor payments – contact each for restructuring, deferral or forgiveness of debt and/or interest, or dividends, or partner distributions.
- Vendor terms or contracts – explore the opportunity to continue the business, but on extended terms.
- Look at all other operating activities AND:
- Keep star performers and work with them.
- Coach and motivate the average employee to produce better results.
- Eliminate all weak or underperforming departments or individuals.
- Replace B&C performers with A&A+ performers that are now available in the market.
Examine all elements of customer acquisition, servicing, retention, and relationship building and enhance each step of caring for customers.
Look for opportunities within your industry OR in an industry you could easily pivot into to fill gaps of failing competitors.
- Be aware of who is leaving the market.
- Be opportunistic about acquiring people, assets, customers at a low cost.
- Be flexible to recast and reinvent your business around these new opportunities.
REINVENTION IS YOUR ROAD TO RECOVERY AND PROSPERITY!
About The Author
Stephen Gross, CPA, CGMA, CVA, CFE — EVP of Hegemon Holdings and Co-Founder of Trusted CFO Solutions — is a big picture thinker and connector, with 40 years of rich and diverse experience in the C.P.A., business consulting, and venture capital worlds. Steve was an early adopter and evangelist of cloud-based accounting, as well as the concept of a virtual C.F.O. or Controller as a method of outsourcing the position in small businesses and startups. Learn More About Steve…