Rather than looking at salvation from lenders and investors seek ways of generating revenue from sales rather than from lenders.
A few years ago a gentleman called me and requested we meet urgently and discuss if he could engage to offer some advice on how to turnaround his business that was doing badly.
Normally I prefer such meetings in my office or client’s office but on his insistence we met at a posh restaurant in town.
One thing that was evident at the first encounter was the man was living large and his young business could not support it. I confirmed this but my attempt to highlight it as an issue was repulsed. He sent an early indirect signal that if I wanted the job I should focus on the business and not his lifestyle.
The gentleman never engaged me and I never heard of him again until we bumped into each other recently in a mall. When I inquired about his business he told me he sold it a while ago and he is trying a hand in consultancy. I felt sad about.
I smiled as I went away recalling what my professor once said that majority of consultants are failures who brag a long list of where they have worked and enjoy it because no one asks them why they never reached the apex. That a story for another day.
Most woes in one-owner or family business are caused by lifestyle, especially where the business is their sole means of livelihood.
The first step in turning round such a firm is to swallow your pride and cut cost. It can be really demeaning to take a bus to town, discontinue subscriptions, cancel club membership or move to a less prestigious location to cut cost, yet that maybe the only viable option.
Cutting your own cost first would ensure you don’t overburden your business. Equally trim down the business expenses to the very basic. Look at can be sacrificed without affecting business much and suspend “nice-to-have things” until things improve.
Secondly regain control of your business. Studies of most struggling businesses reveal that the owners are neither in control nor informed on daily happenings.
Having todate information on both financial and non-financials helps one to make informed decisions.
During turnarounds work, delay gratification and focus on long-term solutions rather than quick fixes. For example developing a good product, taking time to market it or prospecting customer who may not buy now may not be appealing, but that may be the ultimate magic.
Select one or few strategies that work and focus on them rather than spending time moving up and down or thinking salvation would come from starting other income generating projects. This would only succeed in worsening the situation.
Rather than looking at salvation from lenders and investors seek ways of generating revenue from sales rather than from lenders. Regardless of the state of economy or how hard it is, sales are the best source of business revenue.
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