Many entrepreneurs are suddenly worried about the future of their businesses. They feel pressure from the invoices piling up or don’t know what steps to take next. Actually, you can take action within the hour to save your business and come out on top by employing an emergency principle we learned as combat veterans in the military, and we use every single day to save businesses.
In a situation where you have to make decisions fast or people will die, triage is the practice of controlled chaos that allows you to use speed of knowledge and make a quick assessment of your resources to identify immediate next steps to save as many lives as possible.
Here are 10 immediate business triage steps you can take to save your business.
1. Be proactive
You won’t get what you don’t ask for, so ask for what you need and take massive action in every area of your business, from contacting creditors to extending your current products and services to fit these current times.
2. Communicate with your customers and clients
Let customers know what the status of your business is. Tell them about the efforts you’re taking to get them your services or products as quickly as possible and reassure them that you’re doing everything possible to serve them.
3. Take a debt holiday
If you need to, call all of your creditors and ask to freeze payments for six weeks or longer to save your company. If they push back, use this as your opportunity to negotiate a discount on an invoice or lower payment plan.
4. Secure the value in your business
By securing the value in your business, you ensure creditors cannot access them should things turn sour. For example, if you own a construction company and you have $100,000 worth of equipment, transfer those assets to another legal entity that you set up (check with your accountant) and then lease it back to your construction company. This is a legal strategy of placing your assets into a different company and keeping it out of the hands of creditors.
As long as you don’t have any litigation going on in a company right now, you can secure the value in your business this way. You can do the same thing for intellectual property. Businesses do this all the time under normal operating conditions.
5. Put all employees on telework (where possible)
At the time of writing, most business owners must allow employees to work from home where possible. However, if this is not the case, identify which employees could continue their jobs at home and further mitigate the risk of contagion in your business.
6. Collect debt (even when it’s hard)
Many people feel awful about collecting debt, even worse during this pandemic (and catastrophic events in general). You can do this tactfully by asking clients what they can pay every week, month, or quarter and get it set up. Offer a 10%-25% discount if they pay early or waive interest for a set period of time, you know your margins.
7. Flip that line of credit
A time like this is exactly what your line of credit is for. Lines of credit have higher interest rates, but you can call the bank and ask them to flip it into a long-term loan immediately. If they’re willing to do so, you’ll benefit from a lower interest rate and you might get to put a little bit of cash on top.
8. Negotiate penalty freezes with the bank
Call the bank and ask them to freeze penalty or late payment fees for the next several months.
9. Build a robust cash flow plan
To keep this simple, open up a spreadsheet and create columns for each month for the next few months to a year. For each month, plug in all the payments you have coming in from your debtors and projected revenue from products or services. Then subtract everything you owe to your creditors. Sum it and see what your cash flow looks like at the end of each month.
Look at the months when you have a shortfall. Move the creditor payments around until you’re not negative at the bottom. If you can only make a certain payment three months from now, move it and call that creditor and see what you can negotiate. Typically, if you say there is no other way, they agree.
10. Get rid of nonessential overhead
You’ve probably built good business perks into your business, but your employees or customers can survive without them right now. Look at every overhead item and say: “Does this make me money right now, or is it a nice to have?” Would you rather pay your employees or keep the water cooler and free lunches?
After walking one of our clients through these exact steps, we reduced his operating costs by 80 percent while maintaining stable revenues due to a membership model by taking his business online.