The SCORE Association, “Counselors to America's Small Business”

What are the Options?

· Do not panic, avoid rash decisions

· Think Tactically

o Need tactical, survival strategies

o Focus on the next three to six months

· Develop standard accounting reports

o Balance Sheet, Income Statement, Profit and Loss Statement

· Remember, businesses only fail for one reason; they run out of cash!

· Focus on 5 largest expense items

· Get help from an objective 3rd party

o Accountant, Lenders, SCORE

Increase revenues and/or reduce costs …… or both

Step 1 – Look Internally

· Review the entire company objectively

· Product offering is current and meets market needs

· Structure, location, and appearance received positively by the market

· Personnel capable and knowledgeable about the company and its products

· Customers aware of the best reasons to deal with you

· Customers see you as a positive addition to meet “their” needs

Step 2 – Stop the Bleeding

· Keep employees informed of the current business situation

· Ask employees for suggestions for improvement

· Review top 5 company expenditures

· Owners should review all company expenditures and sign all checks

· Assign one employee to collect past due accounts. If they are having a problem,

owner should call

· Review cash flow/cash on hand for next 3-6 months

The SCORE Association, “Counselors to America's Small Business”

· Monitor all employees expenses

· Try to secure extended payment terms from suppliers

· Consider purchasing via company credit card. This may give you15-25 days of

extended terms

· If cash position allows, take advantage of early pay discounts

· Consider a twice monthly pay schedule

· Reduce employee hours versus layoff. Also consider using contract labor (know

IRS rules)

· All office meetings should be very early in the day. Keep short and focus on

important issues

· Try to secure line of credit for unforeseen expenses

Step 3 – Downsize

· Downsize office

· Reduce employees, eliminate those that are not performing

· Review and reduce all office expenditures NOTHING IS SACRED!!!

· Reduce slow moving inventory

· Review advertising and reduce if possible

· Review all salaries, including owners, to see if they can be reduced

· Eliminate company cars when not required

· Reduce vacation time until things improve

· Review the business with your accountant and banker to determine if you will

be able to survive the recession

· If you cannot maintain your debt levels, develop a restructuring plan

Step 4 – Restructure Debt

· Should you restructure debt on your own?

o If you can afford to pay off past due debts over the next three months,

you can handle the debt

o If you need six months to pay off these debts, you can probably

negotiate with your creditors

o If you need one year to pay off debts, you need a restructuring plan

o If you need more than one year, seek professional help

· Which Creditors Should Be Restructured?

o Should be restructured

No longer willing to do business with you

You no longer need to do business with

Have stopped giving you credit

Are not critical to your survival

Have placed you for collection

The SCORE Association, “Counselors to America's Small Business”

o Could be restructured

Are still willing to sell to you

Are not pushing for past due balances

Their products, services or equipment are important but can be

purchased elsewhere

o Vital to not be restructured

Are critical to your survival

Without their products, services or equipment, you would be

forced to close your doors

There is nowhere else you could get these products, services

and/or equipment

· A Settlement Proposal Needs:

o A hardship cover letter – summarizes the problem

o A payment plan proposal – offers alternative payment options

o A business history profile – summarizes causes, extenuating

circumstances and actions

Increase Revenues

· Marketing

o Keep marketing & advertising. If you must cut costs in advertising,

then advertise smart, relocate your budget to measurable media

o Apply extra effort in proven marketing techniques for your business.

What worked before is likely to work again.

o Revisit old sales leads.

o Consider increasing your marketing budget and try new approaches

· Bundle products

o Provide special sales offerings or more attractive pricing—buy two get

one free, get free glass of wine with order of calamari…

· Expand

o Offer related products or services. If a customer is happy with your

service, he/she will prefer to buy more items from you

· Evaluate pricing

o Increase where necessary, decrease to improve sales. This should be

done gradually, regularly and in small increments.

o Successful Competitors

Watch if their prices change and respond appropriately

Investigate Bankruptcy

· Consult a Bankruptcy Attorney

· Issues:

The SCORE Association, “Counselors to America's Small Business”

o Continue to operate or liquidate?

o Who manages the business?

o Payment terms for outstanding debt?

o Which assets remain?

o Types of Bankruptcy

Chapter 7 – Liquidation

Chapter 13 – Reorganization for individuals

Chapter 11 – Reorganization for larger businesses

o Note: if debt is guaranteed with personal assets, you are still liable

Marketing

Step 1 – Step it Up

o Expand your marketing efforts

o Spend your time on what really matters

o Study your market

o Change your offer

o Increase your networking

o Be more persistent

o Start making referrals

o Examine your personal brand

o Increase your marketing efforts on line

o Start social networking

o Increase your marketing efforts off line

o Dig out lost proposals

o Spend your money on marketing first

o Track, track, track

o Stop any image advertising

o Track the productivity of your sales people

o Revamp your marketing tools

o Support your sales people

· Step 2 – Change your model

o See a need and fill it

o Make time for face time

o Be customer centric

o Expand your income streams, especially passive income

o Look for affiliations

o Accept “C” clients

o Create package options

o Carve out new niches

o Research

o Do more for less

o Move quickly!

· Step 3 – Grow!

o Seek to expand your market share

o Seek customers globally

The SCORE Association, “Counselors to America's Small Business”

o Consider offering your products or services on-line

o Money

Don't spend indiscriminately

Move on slow payers quickly

Place customers on “auto bill”

Develop new pricing strategies

Outsource

Self finance customers

Bill fast…pay slow

Remember! A down economy weeds out your competition leaving the field wide open

for you!