A Workout Is like Going To The Doctor
No one wants to go to the dentist or the doctor. It is not fun, it frequently hurts and it is always uncomfortable. However, what choice do you have? When necessary, one must go.
No one wants to do a workout either; it is very uncomfortable, it is frequently painful.
The responsibility of a small business owner is certainly to lead the business to success, and in so doing, to preserve jobs and support the financial success of all involved. If this is the responsibility of a small business owner, then when revenues are down and cash flow is inadequate to support the business, then success is challenged something must be done. When this happens the small business owner must consider implementing a workout. What other choice do you have? None. Not doing this results in failure.
Of course, no one wants to do a workout. However, just as no one wants to go to the dentist or doctor, what choice do we have when that is what is critical for health and survival?
Now that we have established this requirement, I expect action – not talk – to be the order of the day as follows:
1. A cash flow pro forma must be created to truly see what your financial condition may be. How much red exists in your operation? How deeply into the negative are you operating? You must know how deep the loss is every day, every week, every month, with every job done and every widget delivered.
2. Once you know how deep the whole is, fix it. Reduce overhead, increase revenues.
3. If you can’t fix it through operations or sales, you must look at your debt – the third rail. Debt is assumed to be an unmovable, untouchable force, a fixed and permanent force. It isn’t. In fact, debt must be eliminated in favor of operational success because without operational success debt will not be serviced anyways. Do a debt workout. What choice do you have?
Cease paying debt service, focus your capital on operations and do a debt workout! Preserve operational success and fulfill your mission bringing success to your business.
