Steps to Survival - Step One: How to Save a Sinking Business
By Dr Paul E Adams | February 28, 2002
"If you don't know where you are going, you could wind up someplace else." - Yogi Berra
If your creditors and the IRS are nipping at your heels, instead of feeling sorry for yourself, fretting, and worrying about the troubles you are facing, give yourself a new job. First, fire yourself as president; after all, you did create the problems you now must solve.
Turnaround Specialist." Before you start to say this is a ridiculous idea, think about it this way. If you were presented with the opportunity to take over a troubled business such as yours, what would you do? Would you not find a way to restore it to health with a positive attitude and action? Of course you would, it would be foolish to pass up such an opportunity- now do it for your financial future.
There is no mystery to putting a troubled company back on the path to success. If your customers are still there and your product or service is not obsolete, most likely your can taste prosperity again. The "pros" that grab near defunct businesses and restore them to health, will tell you to 1. Be a miser with cash. 2. Grab every dime owed to you and delay paying your bills as long as possible without creating more problems for yourself.
I write from the pain of personal experience. In March of 1982, with my new business facing collapse from, debt, declining sales, and a severe cash shortage, we closed our manufacturing plant, sold the equipment- to pay some of our debt- arranged with a sub-contractor to do our manufacturing and moved the remains of the company to a small office suite.
My suppliers were suing for payment and I was barely able to pay the telephone bill and the office rent. I dreaded the phone calls-irate creditors are not always polite. I could not even declare bankruptcy, as I did not have money to pay my attorney.
I desperately sought a solution. As I could not pay the bills and my new subcontractor insisted on controlling my accounts receivable, (keeping most of the receipts) I was left with the only option of going on the road selling. It helped, I was able to pick up enough business to cover the telephone and rent, but little was left to pay my debts.
Eventually, creditors grew tired of my promises and sued obtaining judgments. As I was unable to pay anyone anything and with no money for a lawyer, I accepted these dreaded court documents not knowing what to do.
All of my previous business experience and education did not prepare me for these emotions of failure. As a professor of business, I was not setting an example of successful entrepreneurship. My feelings of self-confidence and self-worth evaporated. In a year, I went from the excitement of a new business- to desperation. It was awful.
I had to learn the hard way how to save my business and I did. Next month, I will tell you about the first step to survival- cutting your expenses to the bone.
| Â | Step Two: Be a Miser! Hoard every Dollar! |