May 132009

Asset protection

Form an LLC or incorporate to protect your personal assets – Don’t comingle.  Use a business entity to separate your personal and business self.



Payroll first – pay your employees first or they will soon be former employees.

What will generate cash?  Figure it out and and pay those bills first to generate the short-term cash flow and keep the cash churning.



Don’t vanish – keep the communication going with your suppliers, customers and employees.  No matter how bad it is, never let them see you sweat – always be confident or they won’t be confident either.

Kill the rumor mill – as the environment gets worse, the rumor mill will take on a life of it’s own.  Show confidence and kill the rumor mill before your competitors start feeding it.


Use the business’ resources

Customers – look for sales and prompt-pay opportunities.

Suppliers – look for sales, return opportunities as well as extended terms.


Cut the crap

Fire-sale the overstock – it’s time to get rid of the crap that you’ve been leaving in the back of your shop -turn it into cash!

Look at new opportunities on Ebay, Craigs List, etc..


Think unconventionally

Can I leverage what I do into other markets?  This is a great opportunity to grow the breadth of your business doing the things that you already know how to do!


Cost control

Don’t throw the baby out with the bath water – control the costs rather than cut them.

Employees – take care of them!  If you’ve normally bought lunch every Thursday try to continue it to avoid throwing up a red flag with your employees.

Marketing – This goes along with not throwing out the baby with the bath water.  Tough times are when most companies cut back, but the ones who do the best and recover the strongest are the companies who come out of the funk with a strong marketing effort.


Loan covenants

Don’t let them bite you – If you’ve normally not had to worry about your covenents, they can sneak up on you really quick if you’re not careful.

Work with your banker – Your banker wants you to succeed too!


Cash forecasting

Start small – 4 weeks:  It’s tough (and inaccurate) in the beginning until you get over the initial learning curve.  As you get better at it, start extending out into the future.


Grow – 8 weeks:  If you can effectively forecast cash eight weeks out, you are probably miles ahead of the competition.

Triumph – 13 weeks:  13 weeks is the goal of most cash forecasts – that’s three months!  Of course, the further out it is, the less accurtate, but it at least starts to paint the picture.

— John

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