As the leader of a company under financial pressure, either just starting or already distressed or even under Bankruptcy protection, you can easily feel completely under the microscope, being scrutinized and reviewed by any number of outsiders. We’re talking way beyond self doubt here – many of your peers feel they are being questioned on anything they do with the result of feeling powerless and afraid to act. And to make it worse, this doubting comes from some of the same people who looked up to you as a success.
Yes, you really could be traumatized (the feeling of being in danger and unable to control the event which can cloud your judgment and cause inaction) but let me assure you that you still have the power to act and be successful. Just chose your actions wisely and avoid the temptation to ‘do something, just do something’. Below are just a few key areas where you can invest your time and energy, returning your power to control events:
Try not thinking in terms of sales forecasts alone and start thinking cash to cash cycles per fiscal year. How long and expensive is it for Prospect A to decide and place an order, for you to procure same and then deliver, recognize revenue and finally collect? If the imbalance is beyond a reasonable threshold, do you need Prospect A? Weight your sales pipeline and forecast in terms of the cash to cash cycle and not just the close date. Manage accordingly.
Try shortening your sales cycle. Many times a sales cycle is a certain length and cost because that’s the way it is in a particular industry. Work with your CFO – brainstorm how you can restructure what and how you sell to bring forward revenue recognition and billable events.
Can you use cost + X% pricing and open your books to your best customers? In these times, transparency is a real plus and showing you make a reasonable profit over cost is overwhelmingly endorsed by most purchasing agents I know. It also helps put a floor under negotiations. If one of your competitors is willing to charge below your cost+ X% figure, you can now show the customer that your competitor is not likely to stay in business or service them well and nothing ticks off a purchasing agent like uneven performance or company survival risk.
New revenue streams leveraging what you already have
If you have the time and bandwidth (see the last paragraph in this positing), look into leveraging your existing assets and capabilities into new revenue streams. One Internet Portal I know is tied to the Logistics and Shipping industries, which as I write this, is seeing it’s first decline in revenues in its 10 year existence. They do have serious capability in data centers and web application building and support. They’re actively soliciting new business from various companies (some mof them existing customers) looking to chop their internal IT costs.
Consistency with your customers and suppliers
Chances are, your suppliers and customers experienced varying degrees of inconsistency while things were getting rough and have pretty much had enough. Restoring consistency is totally under your control.
Going forward, every pre-sales promise must be kept, from delivery to installation, to returns and warrantees- no exceptions, and kept to a ‘T’. Work backwards to detail the best terms and timing you can get from your vendors and bake this info into your sales promises and contracts.
In best of times, your customer’s Purchasing Dept. tracks vendor performance, and in these times, they perform Vendor Rationalization (as you should), meaning they cut back on inconsistent or less than perfect vendors so they get the best terms from the best vendors. That seemingly minor 1 week delay can now become disastrous.
Problem employees, partners and investors
External issues like the economy are stressful enough, you don’t need internal issues. Employees who play politics, even if they are ‘on your side’ must go. Partners who publicly undermine you must go. Investors who are not trying to help you get thorough this tough time must be paid off and go. Employees, no matter what their tenure, who resist change, must go. Sometimes valuable employees, even formerly key people, no longer fit the future direction. They have to go. I know of a highly successful owner of a significant industrial distributor who had a mini-stroke at work because he didn’t say “go” when he needed to.
What do you do when these people won’t “go” without a fight? If you are the person in whom the Creditors and customers have faith, then you have tremendous power. If you have to buy out a partner, you can force the issue if you have the backing and time the payout to future events. The alternative is they have no-payout from the no-company. Caveat – any Interim Manager worth their pay will tell you to pre-plan both the new organization and any legal steps required before you pull the trigger on employees or partners. Avoid the feeling that firings means you still have control and power. The power is in thinking and planning and getting your ducks in order, not just execution.
One last thought – learn to rely on those advisors who you pay because they are on your side. You must always remember who pays each advisor or overseer/Trustee. If they are on the Creditors Committee you can rest assured they are sitting there wondering how much bone marrow you have and what’s the daily price per gram. The Trustee is there to protect creditors. Your attorneys are on your side and you both have the same mission to accomplish, i.e. get you the best personal outcome. Same for your Accountants.
There is another type of help which is invaluable (insert shameless product placement here). You need a trusted advisor or Interim Operating Officer who can think clearly, is on your side (paid by you), objective, apolitical, has not been through your personal trauma and based on their experience can make well reasoned decisions and take this burden off your shoulders. If they are also an execution & Operations leader, that’s the home run here – let them do it so you can focus on those alternate revenue streams we mentioned earlier. Having to take difficult decisions and then execute, this outsider can become a rallying point – the person everyone can ‘agree’ to hate but accept for the short term. The best part of this relationship – once you’re healthy, they walk out the door.
I’m not going to tell you to ‘snap out of it’, or some other greeting card saying. What I will say is that you cannot do things as you once did, but you have the personal power to do things differently and get through this traumatic event.
Rich Eichen is the Founder and a Managing Principal of Return on Efficiency, LLC, who’s website is http://www.growroe.com and is one of their senior turnaround leaders/CROs, Program and Interim Executives with over 25 years’ experience reshaping companies, Operations, IT and key initiatives. He can be reached email@example.com