Transcript Document
Surviving Tough Times
SCORE
Grand Strand Chapter
Silicon Valley Chapter
Philadelphia Chapter
Houston Chapter
The Environment
Credit is tight
Stock market has collapsed
Unemployment is rising
Consumers are spending less
A steady stream of bad news…
In the best of times,
40,000 businesses
fail each year
Impacts on Small Businesses
Fewer customers with less dollars to spend
Greater competition for their dollars
Rising debt; loans difficult to obtain
Business becomes unpredictable
Warning Signs
Danger
– Can’t pay monthly bills
– No profit at month end
– No paycheck at month end
– Inventory accumulating
– Buying patterns changing
What are the Options?
Reduce costs and Increase Revenues
Revenues
Expenses
First Steps
Do worst case forecast for next 12 months; Focus
on the next three to six months
List steps required to stay solvent
List actions to address 5 largest expenses
– Be severe, its much easier to cut hard once than multiple times
– Do not assume that sales growth will save you. It never does
Review your Business Plan
– Product mix, Location, Appearance, Pricing, Structure
– Identify why your customers like to do business with you and do more of
that
– Identify key personnel and make sure they stay happy
Get help from an objective 3rd party
– Accountant, Lenders, SCORE
Stop the Bleeding
Owners review all expenditures & sign all checks
Monitor all expenses closely
Review cash flow for next 3-6 months
Assign one employee to collect past due accounts;
consider factoring
Secure extended payment terms from suppliers;
consider purchasing via company credit card
Prune excess/obsolete inventory
Secure line of credit for unforeseen expenses
Reduce employees hours
Increase Revenues
Assess the marketplace for changes
Apply extra effort to see if what worked before
is likely to work again; if not, adapt
Revisit old sales leads
Consider increasing your marketing budget
and try new approaches
Bundle products; provide special sales
offerings or more attractive pricing
Expand product line or geographic reach; buy
out struggling competitors
Downsize
Downsize office; Reduce all office expenditures
Reduce wages
Reduce employees
Eliminate slow moving inventory
Review advertising and reduce if possible
Get help from objective 3rd party to determine if
can survive the recession
If you cannot maintain your debt levels,
develop a restructuring plan
Restructure Debt
If you can afford to pay off past due debts over
the next three months, you can handle the debt
If you need six months to pay off these debts,
you can probably negotiate with your creditors
If you need one year to pay off debts, you need
a restructuring plan
If you need more than one year, seek
professional help
A Settlement Proposal Needs:
A hardship cover letter – summarizes the problem
A payment plan proposal – offers alternative payment
options
A business history profile – summarizes causes,
extenuating circumstances and actions
Source: Corporate Turnaround (www.CompanyDebts.com)
Be Strong
Be mentally prepared to handle unexpected
events
Maintain good physical & mental health
Include the family
Communicate, Communicate, Communicate
People, including creditors, follow leaders
not victims
Summary
Think strategically; act tactically
– Focus on the next three to six months
– Reduce Costs AND increase marketing focus
Aggressively attack expenses
– Focus on the five largest expense items
Centralize control of expenditures
Make time to increase marketing
Get help – See SCORE!
SCORE
®
Counselors to America’s Small Business
Come in
for
Free Counseling
8701 S. Gessner #1200
www.scorehouston.org
713-773-6565