OK, Jeffrey What are you doing about the economy
I’m sitting having a bagel with my friend, Rex Eagle — an artist, business consultant and exceptionally creative and insightful person. We’re friends, and meet once a week or so to talk about the world — our world.
Rex asked a seemingly superficial question: “What are you doing about the economy?” As I began to answer, I realized I was doing a number of things worth sharing with you, so I documented the entire conversation.
NOTE: For the past 15 years my business (probably like yours) has done nothing but grow. But all of a sudden (probably like yours), it hit a snag: volume, cash, fixed expenses, and unlike big business, no bailout — or should I say, I’m my own bailout.
The list below contains both business actions and money actions, and they are actions I took the moment I felt the business world, and my world, was in jeopardy.
Here’s what I have done to date for my business and myself:
I eliminated my own salary, the first move of a true entrepreneur.
I cut every unnecessary expense: line by line, item by item. If I didn’t need it, it went.
Based on numbers, cash flow and predictions, I cut staff — quickly, honorably, openly.
I preserve morale. I trained attitude for all remaining people, left all morale benefits and long-term benefits in place. Note: Internal cutting reduces morale to zero. Cut people, not salaries. If you must cut salary, cut your own first.
I created a small internal “trust” team that meets as frequently as necessary. I put as much family and other insiders on the team as possible to help figure out what is best for the business.
I studied and continue to study money numbers. I make certain that I have a mini financial picture of my company every Monday. This gives me peace of mind, and warns me of any actions I need to take that day.
I predict cash flow. I know what cash is expected over the next 90 days. This way I can have a realistic idea of what really needs to be done. It’s not a “burn rate”; it’s a snapshot. And a planning tool. People who post “burn rates” expect to die. I expect to live, thrive, profit and succeed. Burn rate, a term invented in the dot-com era, contains two of the most negative words ever perpetrated in business. And incidentally, most of them burned.
I immediately became closer to our sales and the selling process. No one has ever cut their way to success. I became sales manager and began getting and giving daily feedback.
I forecast sales. While selling cycles always take longer than predicted, this is a way to help predict new money.
I talk to my customers to get a feel for their market. This gives me a cross section of information, and helps me get a realistic picture of how things really are.
I observe more than ever: antennas up, staying alert both for warning signals and opportunities, and taking action accordingly.
I live in the now. This economy changes daily, and while I try to spend as little time as possible being media-flogged, there is an amount of business information necessary to understand what is happening, and react to it. I am paying attention to today.
I limit media exposure: Five minutes a day is all I need; I invest the rest of my time in my business.
I am not afraid to risk. Part of being in business for yourself is the understanding that risk is part of the process. I have always been willing to risk all to win. Now is no exception.
I am not afraid to ask: for help, for advice, for understanding and for business.
Here’s a clue: Don’t listen to “experts” predicting what might happen. They have no idea what’s going to happen. One thing is certain: You can make it happen!
There are more actions. There are more revelations. There are more secure moves to make. And there are more risks to take. This is part one.
Do this: Come back next week for the rest of the “economy” actions I’m taking. Meanwhile, make a list of your own. After part two, I’ll post the entire article on my Web site.
Jeffrey Gitomer can be reached at (704) 333-1112 or e-mail firstname.lastname@example.org