Businesses around the company are beginning to slowly open after shutting their doors due to Covid-19 closures. Many owners are finding themselves stuck in the waiting game, filing for PPP loans and stressing about ways to keep employees working and clients served. At The Lonely Entrepreneur, we aim to address the business and personal problems that all entrepreneurs and SMB’s face every day. We know the struggle, and want to serve you with resources, tools, and solutions to help you stay the course, survive and even THRIVE through this trying period.
In Part Two of this special series, our CEO and Founder Michael Dermer shares lessons directly from our Entrepreneur Survival Guide. The Survival Guide offers over 100 actionable tips and strategies for navigating recession and is available for FREE DOWNLOAD today! If you are an entrepreneur, business owner, solo-preneur, or independent contractor, you won’t want to miss this! The Survival Guide contains a downloadable manual, bite-size learning modules, weekly live video chats, and more.
Not Applying for an EIDL? No Problem. Start Saving Cash with these 5 Strategies (Part 2 of 2)
Cash is king, and you need it! Without a (steady) supply of incoming cash, your business wont function. When faced with a recession, your primary focus needs to be the status of your cashflow. You have to preserve cash and generate new cash. In Part One of this blog series, we shared three strategies to help you rework your revenue and expenses. We shared the importance of putting every expense (and I do mean EVERY) on the table for review. We also shared about the brutal way you must eliminate every unnecessary expense and, lastly, the importance of negotiating with your vendors. (You can read more about these strategies to avoid business bankruptcy here.)
In this second installment, we give you two more ways to fend off business bankruptcy.
Manage your cash aggressively to fend off business bankruptcy.
You’d be hard-pressed to find a leader that likes letting go of an employee, especially one that performs well or has a great work ethic or energy. During uncertain economic times, you’ve got to get tough and put long-term stability over emotions.
Strategy 4: Make (Hard but Necessary) Decisions about Employees:
People-related decisions are emotional, but you have to make them. This is never easy. You must reduce your employee expenses. And for many of us this is a large portion of our expenses. But you must reduce these costs. This can take the form of layoffs, but you can try to be creative to help employees. The most important thing you need to do is to align your expenses and outlays to cash. Here are a few ideas:
1. Split One Job into Two or Three. It’s better to give employees the opportunity to get 1/2 or 1/3 of a salary than no salary.
2. Tie Compensation to Results: you may have to reduce base salaries and tie salary to results you get – especially results that deliver sales or cash or reduce expenses.
3. Working for Benefits: for some employees, even though you can’t afford them, they really need benefits. So even though you may have to reduce their base salary, perhaps you can leave them with benefits.
4. Working for Free for a While: you may have to ask employees to work for free for a while. You can make this temporary or even give them equity in your company.
These are tough decisions that require leadership, but everyone must understand these times. In the end, they need to do what is best for them and their families but sometimes in a best-case scenario you can use these creative means to keep them aboard until the virus wanes.
Strategy 5: Get Creative with Free or Low-Cost Resources:
If you need work done, think outside of the box on how to get it done at a lower cost, and sometimes even free!
1. Available Workforce. Unfortunately, there are lot of people out there that are and will be out of work. See if some of them will help you and tie their compensation to results. You may also have to take things offshore. Look at Upwork for lots of opportunities to get low cost resources.
2. High School and College Kids Stuck at Home. Unfortunately, there are lots of high school and college kids who will have time on their hands. Ask if they can help you.
3. Mentors and Advisors. Instead of paying for advice on legal, accounting, funding or other key business issues, use your brai