February 11, 2009

Two Keys To Survival

Take it from somebody who has survived more than one economic bubble bursting: your survival depends on two things.

Your cash and your attitude.

And sometimes it’s not the cash that’s the biggest challenge.

That is our topic this time.

Two Keys to Survival

The number one business killer is lack of cash. More new businesses fail from lack of capitalization than any other factor. Of course, this is especially true in times like these, when credit is harder than usual to get and much more expensive.

Oddly enough, profit is not as important during a downturn as cash. It seems like a paradox, but you can run an extremely profitable business that still fails because it doesn’t have enough cash. Cash is the blood that has to pump through the business to keep it viable. A profitable business with no cash flow will soon be a dead business.

Given that cash flow is vital, your attention should be focused on doing the things that generate cash—especially closing deals quickly and collecting deferred payments—or that reduce its outflow. Reduce expenses where you can, but beware of making cuts that hurt your potential for closing deals and bringing new cash in. It may not hurt to reduce your building maintenance but cutting back on lead generation could have a serious negative impact on your future.

My friend, Dr. Reed Holden, author of Pricing with Confidence: Ten Ways to Stop Leaving Money on the Table, argues that survival must be the number one goal in difficult times. “Survival pricing focuses on immediate pricing actions businesses need to take in order to make it through a deep and potentially long financial crisis,” he says. He recommends using incremental cost pricing to keep money flowing into the system and searching for services that will keep customer costs low and service levels high. You can read his nine other specific recommendations for avoiding death by cash strangulation at http://reedholden.wordpress.com.

But most smart, experienced business people know how to manage their cash. A bigger challenge is figuring out how to manage our attitude.

In a financial downturn, panic is the enemy of good thinking and good manners. We find business owners and managers forgetting to treat employees with respect, failing to be patient and empathetic with clients.

A positive attitude goes a long way to establishing the momentum for success. If you treat clients and opportunities without desperation, if you maintain an optimistic outlook, you pull others toward you. That’s exactly the kind of attitude your clients and employees want to be near. Not anger, not resentment, and certainly not fear. No, they want to be near somebody who exudes confidence and a positive frame of mind.

Plus, it’s worth making the effort to treat clients and employees with respect. One thing we all know is that the economic climate will change again, and when it does you want your clients to have strong, positive memories of working with you through the bad times. You want them to come back eagerly when things turn around.

Sadly, maintaining an upbeat, respectful attitude is sometimes more difficult than maintaining cash flow! It may be easier to track the numbers and make appropriate choices on pricing and cost containment than it is to monitor our own emotions and resist the temptation to succumb to fear or negativity.

One way to generate more cash is to generate more proposals and to do it more efficiently and effectively. Take a look at the tools we offer and you’ll see that they are ideal for helping you accomplish more with less and for transforming opportunities into cash. The price is right—the demos are free! And if you request information, we promise to be upbeat and friendly when we respond. See the demos at www.santcorp.com/demo.