Survival Plan Even if you have totally run out of money and are completely without hope, your business can almost certainly survive the COVID-19 crisis. Furthermore, you can emerge with a business that is stronger than the business you had before the crisis.
How do I know this? My name is Bob Adams. I have started many small, woefully undercapitalized businesses and successfully navigated them through one crisis after the next. The most common and painful crisis was running out of cash. At times not only did I have no cash on hand, but I projected massive cash shortfalls in the months ahead. At other times my bank showed me the door and no other bank would lend me money either.
I’ve survived running out of money and so can you.
All too often it seemed like my business was finished. I was totally out of money and hopelessly in debt. And the future looked even worse. It seemed like there was no way out.
But time after time, I put together a plan and found a way to survive. For example, I started my book publishing business in my basement apartment with just $1500 and took it through one crisis after the next, eventually growing and selling it for $40 million.
No matter how bleak things seem now, your business can survive. And you can create an even stronger business model at the same time. Here’s how to do it.
First, calm it down.
When the bleakest moment hits, you have to calm yourself down. For me, I’d first go for a run. Then I’d remind myself that while running out of money was bad, it wasn’t as bad as let’s say getting hit by a truck. But sometimes I felt so shocked by sudden bad news – such as finding out that we would be $400,000 short in 30 days – that I would have to digest the news for a day before being able to work on a solution. Sometimes you can’t just dive into it.
You might be thinking how can I get calm when the crisis is threatening to end my business and throw my life into upheaval? You can’t expect to get totally calm. But you can get calm enough to start working on a new plan for your business.
OK… so you’re maybe you’re thinking…forget getting calm and coming up with a plan, I already am out of cash and can’t pay my bills. Now what?
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Second, understand the key positive difference for you in this COVID-19 crisis.
Listen. This COVID-19 crisis really is different than any other. Everyone on the entire planet knows about it! And everyone is being impacted by it!
And that’s a huge benefit to you! Usually, your business problem is YOUR business problem. But this business problem is the WORLD’S business problem.
Because it’s a global problem everyone understands what your problem is.
This crisis gives you a carte blanche to stop paying your bills! It gives you a carte blanche for creditors to understand why you are not paying your bills.
You’ve got a carte blanche to stop paying your bills.
One of my friends got a letter from his landlord saying that they expected him to continue paying his rent. So he told me he still needed to pay it. But the reason the landlord sent the letter is because they don’t expect him to pay the rent! Or at least they expect there is a good chance he and many of their other tenants are not going to pay the rent. At least not right now.
This crisis in your business did not happen because you made a business mistake. This crisis did not happen because you were not prepared for a recession. This crisis happened because of a global pandemic that led governments forcing businesses all over to shut down and consumers to stay at home. It’s not your fault.
You can’t be expected to pay your bills normally when the government is shutting down both businesses and consumers.
People don’t expect you to run your business and pay your bills the way you usually do.
To be honest, from a legal perspective, you are taking on risk if you don’t pay your bills. But if you can’t pay your bills or all your bills, then you can’t pay them. During this crisis, there is nothing dishonorable or unethical about not paying your bills if you can’t. It is possible that creditors could take legal action against you. But in most cases, the legal action is not going to begin quickly, especially at this time.
But you do need a survival plan.
So let’s start developing a survival plan that’s going to get you through this.
If you have some key employees you may decide to completely involve them in all steps of creating your survival plan. For me, during a total cash crisis, I tend to do most of the work in creating a survival plan on my own. Speed and making difficult wide-sweeping decisions quickly matters. I do whatever I have to do to find quiet time, out-of-the-office to get going on a plan. And I typically work on it deep into the night.
Then once I have a basic plan, I’ll go and present it to key employees, get their feedback and modify the plan. Rushed as I might feel to get a survival plan into action, I would try to listen patiently to feedback from key employees. My plan may change significantly after getting their feedback. And even if my plan doesn’t change much, it is important that the key employees felt that they had a “voice” and their opinions were “heard.”
If you have a really talented and highly involved team of employees you may instead decide to involve them completely during this process of creating a survival plan. This, of course, can get messy if even part of the discussion gets into even temporarily eliminating their positions. So think out this approach before you embark on it.
Now I know many business people, like my son, think that I run my business like someone from the age of dinosaurs since I don’t involve my key people throughout a process like this. And I don’t think he is necessarily wrong. You need to choose which approach will work best for you.
Forget how you ran the business yesterday. Today is a whole new ball game.
Whether you create a survival plan by yourself or with your team, there is a basic mindset that I recommend: “zero-based planning.” In other words, the past is past. Forget it. It’s not going to work now. Start with no assumptions. Start with a blank sheet of paper.
In other words, you are not going to think about maybe trimming the hours you are open or reducing your marketing costs or trimming your overhead.
Instead, you are going to redesign your business totally. And you are going to design it to survive during this tough time.