1. Step back into Startup Mode
- Everything is now a fast moving experiment
- let go of control – ask instead for data and base all decisions on that data instead of custom or perceived wisdom
- move faster – demand that everything be delivered in two week sprints – or don’t start the project
2. Measure everything
- Cut all marketing that can not be measured (brand development, exhibitions, print magazines etc)
- track everything and then ruthlessly optimise your marketing spend
- create new marketing tests (plural) – expect fast results, collect data and then decide – cut or expand
3. Current and past customers
- Focus on your past (over 1 year since they bought) and current customers
- seek to upsell current customers and / or ask for recommendations/ 5 star reviews
- seek to invite back past customers with special offers and events
4. Re-pick the team – build from the ground up
- Grab a blank sheet of paper – who will you pick *first* for your team? If you could only have three people – who would they be? If only five people who would they be? Etc…
- then let go of everyone else or renegotiate to a flexible / part-time contract or reduced working plan
- remember, it is more important to be able to pay wages than to make promises that you can’t keep
- give everyone their due notice according to their contracts; help them find their next role
5. Cut fixed item costs
- Finish contracts or renegotiate
- sometimes suppliers (or HMRC) will accept a payment holiday or a payment schedule
- ask fixed cost suppliers – rent, telephone costs, equipment – to renegotiate terms
- be careful who you speak to – sometimes materials suppliers will cut credit terms
6. Get your timing right
- Cut in early autumn so that you can survive a hard winter – it might take until early November for the costs to have dropped out of the business – giving you a few weeks to refill the coffers before potential hard times in. Equally, cut in May to survive a slow summer.
- you will know the cyclical shape of your industry / sector – be financially prepared ahead of time for the slow months, especially if you market is slowing
7. Make brave decisions
- If you are weighing up whether to take a hard decision and are uncertain – then come down on the side of taking the tough choice. Humans are built to avoid tough decisions – so lean towards them when times are tough
- over come ‘sunk cost’ regret – our nature makes us think ‘but it cost so much time and effort to assemble this team / to expand those outlets / to train these sales people’ – let go – these are sunk costs and you can’t get them back. If a failed attempt to expand is draining your cash, cut it back.
- if you rely on forecasts from your team – remember, when under pressure, they naturally produce ‘over confident’ forecasts – so cut the forecasts by 25% and / or 50% – and build your survival plan from that basis.
Finally, once the business has cash in the bank again, rethink your product to market fit – is this the time to pivot?
Good luck – and get some help. If you need someone to talk to or help you implement these steps – get in touch. We have special delayed payment plans for turn around challenges.