This is part of a series — Five Things to Do When Your Business is Failing
- Grow the Top Line With Quick Sales
- Aggressively Triage and Cut to Focus on the Core Business
- Don’t Let Your Business Fail Alone-Ask for Help
- Think About the Worst Case Situation and Prepare for It
- Keep Your Personal Core Protected So You Can Do It Again
The owners and managers of the company should recognize when things are on a downward path before the vendors, suppliers, and workers do. When it gets past a normal business downturn, they should not be afraid to ask for help!
Just about everyone that is working at a company enjoys their job and wants to see it continue. Many times they don’t know that there is a potential problem on the horizon. The owners may not want to tell the senior managers about their concerns, because it could be perceived as a sign of weakness, and because of the possibility that rumors could start spreading and key employees would start to leave like rats deserting a sinking ship. The thing is, most employees are savvy and are able to discern how things are going through the many clues provided by owners and senior managers actions. When it starts to get really bad, it is time to rally everyone around and all pull together.
It is better to acknowledge the issue and show that there is a strong plan for getting back on track. It is important to share this information with senior managers and your bankers. People are much more willing to stand by someone that has a plan and is taking positive and aggressive action to deal with the situation than with someone that just keeps on doing business as usual and hoping that things turn around for the better. All the stakeholders in the success of the organization, which includes every employee and all the suppliers and vendors that the company works with, want to see the company succeed, and in many cases would love to be able to help get things back on track. But you have to ask them for help, and asking them for specific help that is part of an overall turnaround plan is the best thing to do.
But don’t show weakness! Show concern, take action, ask people to take a pay cut, ask for an extension of credit, ask for everyone to try to help get new customers, but don’t act weak and out of control. If you do that, then competitors will start going after your employees like sharks in a feeding frenzy, bankers and suppliers will cut your credit, and you will have to exercise one of your fallback plans to protect what you have.
One of the saddest sights that I see is a restaurant that opens, limps along for 6 months to a year, then closes. When my kids and I are driving around and we see a place like that, I point it out to them. My son, who has been part of this exercise too many times, always says, “They ran out of cash, didn’t they, Daddy?” He is right, of course, because when you run out of cash you are done.
Author: Rolf Versluis
Published at Priority Queue