Instead of panicking we began to put every aspect of the business under a microscope. Where do we cut? How can we reduce our receivables? How do we control our expenses better? Should we spend more on marketing or cut back?
Here is what we did:
- We cut our payroll to the bone and then a little more - more productivity, less people.
- We went to our customers, explained our cash crunch and put as many of them as possible on credit cards. That reduced our aged receivables dramatically.
- We went to every vendor and neogiated better terms when ever possible. Admittedly it didn't work all the time.
- Not one penny was spent without the knowledge and consent of the owner.
- We spent a great deal of time on our monthly financials and cash flow projections and watched our cash daily.
- Our major lender stayed with us all the way!
- We put on a dramatic push on marketing. We hired a new sales person. We visited every current and potential customer numerous times. The theory being the economy will turn around and we want to be there when it happens.
- We came up with some creative ideas to help our customers with some of their challenges.
One and half years later our sales are up greater than 30% month to date. We are having to purchase more equipment to keep up with the demand! We have been cash flow positive six months now and getting better every day. So what does this mean? The microscope works!
Here are some good articles that focus on this area:
