My Business Needs Money

The global recession and credit crunch have cut into many of our businesses; we are all in need of cash. Businesses need to go back to the basics in times like this, and you need to look at what brought you to where you were before the current environment. Unfortunately, it may be time to scrap some of the fringe opportunities that are bleeding and steeling cash from the core of our business. It may be time to go back to the basics and focus. Below is a list of 10 action items that may help during these economic times to put cash back in the bank and have your company ready for the next opportunity that comes.

1. Focus
2. Get back to the basics
3. Scrap Projects that are marginal
4. Look at how we pay our employees
5. Look at our variable cost
6. Negotiate with creditors
7. Negotiate with vendors
8. Fire marginal customers
9. Create a sense of urgency
10. Communicate your plan to your team, suppliers, and friends

Focus always, but especially when times are tough. This is no time to be off trying wild ideas, and spending money. This is a time to be razor sharp like a laser and focus on how you make money. Focus on what brings in the bacon; which is replicable and what your business is known for. Focus on the customers that matter and maybe even fire the ones that don't. It is a time to prune your business of waste and marginal opportunities.

Get back to the basics is another way of saying focus, but it goes deeper than that. You started your business or your company on an idea which generated income and made money. Over time you have expanded, taken on new projects, and have tried different things, some good and some not so good. It is time to review your business and see what is not paying dividends. This can be a difficult task because we become emotionally involved with our ideas; however, it is time to get back to the basics of what brought you to where you are.

Scrap marginal projects is again another form of focus and getting back to the basics. Every business that has been around for a few years is not doing exactly what they started doing. They are trying new things and expanding and exploring into new ideas. These economic times will require you to scrap projects that are bleeding cash and or are not returning what your core business can. The problem is that even though a project may be a great idea and may eventually work you need capital to execute it properly and this is a time to conserve and build up your cash. You know that even though a project may not be bleeding cash it is bleeding resources and focus from the core part of your business which is what you should be focused on right now.

Our employees are our most important asset. Most businesses have a core group of employees who are critical to its success, and this group produces day in and day out. However, you may have expanded and have brought in some marginal people who are draining the resources of the company. They may be marginal producers; their compensation may be such that they are draining resources from the rest of the group. It is time to look at how these people are being compensated of if they should be there at all.

Our variable costs are numerous and our fringe benefits that we have afforded our employees may be some of these. It may be time to look at every cost that is not fixed. It time to make decisions about paying for certain things and shifting the cost from our company to our suppliers, to our employees, or to cut them out entirely.

It is time to look at our payables and make an effort to negotiate longer terms, and or discounts. The whole world in being squeezed right now and one sure way of putting more cash on your balance sheet is to squeeze your creditors. This of course can be a touchy subject, but it may be worth a try.

Our vendors are in the same boat as our company. They need to be in step with you and know that you are looking to lower inventory, increase inventory turns, get longer terms, and generally improve working capital. If you go deeper into your vendors organization beyond the sales guy who calls on you, like the CFO, or the CEO they may have ideas and may be able to help you come up with solutions that will put cash in your pocket. These people are your partners and they win if you win, so do not be afraid to engage them in helping you with your goals and objectives.

Some customers cost money to do business with. You know this and unfortunately, this is not a time to be dealing with marginal customers. This is a time to prune the customers that drain the life out of your company and focus on the clients that make you money. You will be amazed at how this puts energy and money back into your organization.

Create a sense or urgency, now. You cannot put off these things until tomorrow. Even though there are signs of recovery in our economy, all economists say that we are in for a long road and no one knows what tomorrow will bring. If you are strapped for cash today, take action now, and do not put it off.

Communicate your target and your goals to your team, to your suppliers, and to your friends. Let the world know what you are doing and what you are trying to accomplish. You have great people and if they know what you are focused on they will pitch in and come up with ideas of their own and this will cause a ripple effect. Don't forget that a few days or weeks ago, you may have been focused on a marginal project and had the team focused on it, and all of a sudden you are realizing that you don't have the money to pull it off. The team needs to know that the priorities have changed and you are focused on building cash and scrapping anything that is not going to help us with that goal.

In summary, you deal with the cards that you are dealt, and unfortunately, the times are different today than they were a couple of years ago. However, it is a good idea to do these actions items at least once a year anyway. All entrepreneurs explore and try different things that they think will help the business, and at least once a year you should take a step back and look at these projects. All businesses need cash to operate, but in these economic times it is more critical to try and build a cash reserve. The banks are not lending and this has a tremendous ripple affect with our suppliers and customers, so unfortunately, we have got to really focus on the essentials. If you make the target to build cash on your balance sheet, communicate the target, and lead the team, you will find money and build your cash.

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