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“If I panic, everyone else panics,” – Kobe Bryant, (1978-2020)
BY JULIA ANDERSON
“For companies hard hit by the economic effects of COVID-19, the actions they take today may spell the difference between survival and liquidation,” says Renee Fellman, a business turnaround expert in Portland, Ore.
Fellman with 30 years of experience helping businesses dig themselves out of trouble is offering a survival tip sheet for business owners struggling to pay the bills. Over her career, Fellman has been interim CEO of 19 companies from a wide range of industries. She's consulted with many more. (Her ideas earlier appeared in an article she wrote for The American City Business Journals, which owns the Portland Business Journal and others.)
10 STEPS to take charge, now from Renee Fellman
1. Employ the tool used by every competent turnaround professional: Prepare a conservative, detailed weekly cash plan for the coming two to three months. If needed, prepare daily plan for the next few weeks.
Be realistic so that you can use this to help ensure that your company does not run out of cash. Going forward, compare budget to actual each week.
2. If the plan shows you will run out of cash, create an action plan to reduce costs and/or increase revenues and collections. Important: Convene a meeting of your most capable managers, review with them the cash plan and every line item on your financial statements and solicit their input and ideas about how to increase cash, increase revenues and decrease costs.
Prepare a written action plan based on the results and specify who is responsible for completing which actions by what date. Nailing down plans and responsibilities is critical.
3. Implement purchasing controls so that only expenditures specified in the cash plan are made. Define who has authority to approve which expenditures, in what circumstances and in what amounts. What other approvals, if any, are required?
4. Eliminate non-vital expenses.
5. Unneeded assets? Old, slow-moving inventory? Try selling these at a discount.
6. Stop producing money-losing products and providing money-losing services. One troubled company joke is, “We’re losing money on every job, but we’ll make it up in volume.” If you are unsure which are money-losing products or services, engage a professional who can quickly analyze the numbers.
7. Accelerate receivables collections. If your business is not totally cash or credit-card-based, consider offering a discount for early payment. For those who cannot pay in full, try to establish a payment plan.
8. Too often, troubled companies specialize in selling to customers that do not pay. This problem is often exacerbated in times of stress. Do you have customers who are unable to pay the amounts they owe you? Are you unsure about their credit status?
Require them to pay cash in advance and design a fail-proof internal system to ensure that your company receives payment before providing its products or services. This benefits your customers, too, by ensuring that they can obtain needed materials and services.
9. What opportunities for additional revenue do you have in the current environment?
10. Monitor the kinds of assistance available for your business and confer with your professional advisers (tax, employment law) to ensure you comply with current requirements.
Editor’s note: The information above is provided solely for informational and educational purposes and does not fully address the complexity of the issues or steps businesses must take given their specific situations and applicable laws.
For MORE: www.reneefellman.com
Renee Fellman, winner of the Turnaround of the Year Award from the international Turnaround Management Association, helps companies improve profitability at warp speed. She has served as interim CEO for 19 companies and has rescued privately held, publicly held, family-owned and employee-owned businesses from the brink of disaster.
I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
Editor's note: All information provided at sixtyandsingle.com is for informational purposes only. Sixtyandsingle.com makes no representations as to the accuracy, completeness, suitability or validity of any information on this site and will not be liable for any errors or omissions in this information or any damages arising from its display or use.