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 this special post, 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.
Click here to get our Entrepreneur Survival Guide!
Think OUTSIDE the PPP Loans Box – 5 Crucial Strategies to Optimize You Cash (Part 1 of 2)
Every business needs cash. Cash is like oxygen – without it, businesses don’t function. When you are faced with a period of economic uncertainty your number one priority has to be cash. Preserving cash is the first step. Generating new sources of cash is the second. But both of those steps are really just about moving cash around. The real work now becomes – how do you rework your revenue and expenses to survive and set yourself up to thrive.
Minimize your expenses ASAP to steer clear of business bankruptcy.
Let’s start with expenses. These are unprecedented times. Virtually every customer – whether it is a consumer or a company – is at risk. You have to say to yourself “what would I do if revenue went to $0?” In other sections, we give you ideas and perspectives that help you avoid that. But in the meantime, you need to have the perspective that your expenses have to go as close to $0 as you can get them. Here are a few ways you can go this.
Strategy 1: Put Every Expense on the Table: this means every single expense needs to be looked at. Nothing is off limits.
Strategy 2: Eliminate What is Not Essential – and Make Sure You Define “Essential” the Right Way: essential expenses are not those that you “want” – it is those that you “need” – really need. You have to really think differently about what is really necessary. We all had plans – the new marketing campaign, the product launch, and so much more. There will be time for all this – but the time is not now. You must consider delaying things that you want to do but not that you need to do:
1. New Hires: unless you are in an extremely strong cash position, new hires should be delayed.
2. Marketing Campaigns: current marketing campaigns should be scaled back significantly, and new campaigns should be put on hold.
3. New Product Development: unless you are right at the finish line, new product development should be stopped or slowed.
4. Technology Enhancements: unless you are right in the middle of it and pulling it back would be impossible, slow this down or stop it.
5. Office Upgrades: with the future of offices in flux, anything to do with real estate should be put on hold.
6. Software Upgrades: unless it is essential, these should be put on hold.
You should be asking yourself, what is essential? And if it is not essential, it should be put on hold for the time being.
[H2] PPP Loans Aside… Your Best Bet is to Negotiate like a Champion.
If you are applying for a PPP loan, you are probably waiting for an injection of cash to keep you going. But think BEYOND the loan – you can do more NOW. And the way to do it? Negotiate like a prize fighter in the ring.
Strategy 3: Negotiate (and Re-Negotiate) with Vendors: Many are happy to have your business at any level, so you may be able to get free or heavily reduced amounts from existing vendors of all types. In addition to asking for deferral of payments for 90 days, you should be reworking your cost levels with vendors. Vendors of all types understand that they will have to provide some flexibility in how they deal with customers if they expect to keep them. Here are a few things you should do with your vendors:
1. Do Not Pay Any of Them Until You Negotiate: cash is precious. You must preserve it. Do not pay anyone until you talk to them. Remember, once you pay them and then try to negotiate, you are in a much worse position. When you withhold cash, you have a lot more leverage.
2. Past or Present Does