How to Save a Sinking Business
“It’s not over ’til it’s over.” Anonymous
This week we start our series on how to save a failing business. If your life’s dream is in trouble, cheer up as our next three columns look at the techniques consultants and new owners use to restore failing businesses.
If your creditors and the IRS are nipping at your heels, instead of feeling sorry for yourself, fretting, and worrying about the troubles you are facing, give yourself a new job. First, fire yourself as president; after all, you did create the problems you now must solve. Next, put on a new hat and appoint yourself to the newly created position of: “Consultant and Turnaround Specialist.”
Before you start to say this is a ridiculous idea, think about it this way. If you were presented with the opportunity to take over a troubled business such as yours, what would you do? Would you not find a way to restore it to health with a positive attitude and action? Of course you would; it would be foolish to pass up such an opportunity. Now do it for your financial future.
There is no mystery to putting a troubled company back on the path to success. If your customers are still there and your product or service is not obsolete, most likely your can taste prosperity again. The “pros” that grab near defunct businesses and restore them to health will tell you to:
1. Cut out every unnecessary expense. No matter the pain, you must reduce all expenses.
2. Be a miser with cash. Grab every dime owed to you and delay paying your bills as long as possible without creating more problems for yourself.
3. Increase sales. Start selling your products and services the way you did when you started the company.
I write from the pain of personal experience. In March of 1982, with my new business facing collapse from debt, declining sales, and a severe cash shortage, we closed our manufacturing plant, sold the equipment to pay some of our debt, arranged with a sub-contractor to do our manufacturing and moved the remains of the company to a small office suite.
My suppliers were suing for payment and I was barely able to pay the telephone bill and the office rent. The company was broke. I dreaded the mail, especially those certified letters; I knew they did not contain good news. I dreaded the phone calls – irate creditors are not always polite. I could not even declare bankruptcy, as I did not have money to pay my attorney.
I desperately sought a solution. I could not pay the bills and my new subcontractor insisted on controlling my accounts receivable, keeping most of the receipts. I was left with the only option: going on the road selling. It helped. I was able to pick up enough business to cover the telephone and rent, but little was left to pay my debts.
Eventually, creditors grew tired of my promises and sued, obtaining judgments .As I was unable to pay anyone anything and with no money for a lawyer, I accepted the dreaded court documents, not knowing what to do. All of my previous business experience and education did not prepare me for these emotions of failure. As a former executive and professor of business, I was not setting an example of successful entrepreneurship. My feelings of self-confidence and self-worth evaporated. In a year, I went from the excitement of a new business to desperation. It was awful.
I had to learn the hard way how to save my business and I did. Next week I will tell you about the first step to survival – cutting your expenses to the bone.
Article – Copyright 2002 Dr. Paul E. Adams. Syndicated by Paradigm News, Inc.
