Events continue to demonstrate that the pandemic has the disruptive potential of the Great Recession “squared”. The duration and depth of this crisis depends, to a very large extent, on the Government’s responses; at the time of this article the recovery plan is still a work in progress. Regardless of the Fed’s steps, most businesses will not rebound anytime soon, and the overall national economy will require many months to fully recover.
As a business owner and leader, your number one priority is knowing the company’s day-to-day reality. For most businesses, today’s reality is that things are bad, and they will get worse before improving. Your most appropriate “next steps” are foggy or unknown. Regardless, you still must operate and lead your business.
Work with your CPA and bank to navigate the various Federal and State recovery programs.
Utilize this lifeline but understand that these temporary programs are not the cure-all.
Actions and reactions that are “too little, too late” kill businesses.
Here are some basic steps to help you evaluate your situation then create your best action path:
Step One - What’s your cash burn rate? Cash flow is paramount; slow the bleeding.
• Fixed overhead - If leasing space, the landlord will work with you. Vendors and banks
will provide more lenient and/or delayed payment terms.
• Variable expenses - Payroll is generally a company’s largest expense. How long can you
support non-productive payroll? This is a gut-wrencher since employees are like family,
yet bottom line, you do no one justice if the company does not survive.
Step Two - Confer with your key leadership personnel and perform a candid and thorough
company self-evaluation. Use a SWOT analysis:
Strengths, Weaknesses, Opportunities, Threats These factors are either a Strength or a Weakness, for example: • Cash/liquidity position is good or bad • Credit availability exists or doesn’t • Have or don’t have unencumbered assets that can be financed to raise cash Opportunities, for example: • Refinance debt at lower rates and extended terms • Enlarged prospective employee pool • Reduced and weakened competition Threats, for example: • Customer slow pay and no pay • Business continues to tank • Interrupted supply chains Your SWOT status will be fluid as events continue to unfold. Get your house in order. Act decisively based on facts, not emotions. Stress levels will drop (really), and survival odds will skyrocket. The lessons learned will serve you the rest of your life.
About the Author Bret Lovett has resided in SW LA since 2015. Prior to this he founded, owned and operated several businesses in NE LA for 34-years. Currently, Bret is the VP of Workforce Housing and Support for a Lafayette-based firm, plus he owns Action Path Business Consulting (actionpathbc.com),located in Sulphur, LA. Contact him at bret@actionpathbc.com or 318-547-5023.
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