We are engaged to perform our workout strategies and to strip the debt away, successfully reducing the personal Guaranties and freeing you to do what? The same plan you did before that already got you in trouble? Believe it or not, this is what happens. Our clients frequently believe that once the debt is gone they are all set.
We all want the quick fix, the easy way, a quick pill to swallow that makes it all better. However, the reality is a business being run as it was run before, even without the debt, remains on thin ice. If the old way is not changed then the old way will once again lead you into a reversal and a downward spiral just as severely as being overloaded with debt. Yes, removing the debt is a huge advance and does, in fact, free you to grow your business successfully again, but the job is not done. Removing the debt is certainly a critically important strategy, a requirement even, but then what? This is not the complete cure, it's merely the beginning.
One must acknowledge that all the reduction of debt means is that the playing field has been leveled and now you can begin to make the systemic changes in your business required for growth, emergence and, in the long-term, more success. So yes, do the debt workout, it is crucial for your survival, however, do not forget the other three poles of successfully navigating the downfall:
1. Downsize. Do so meaningfully and deeply. Yes, you are loyal to your employees but carrying the extra weight of under-performing or excess employees will sow the seeds of disaster once again at some point down the line. Downsizing means more than just reducing the employee pool, it also means removing inventory, reducing overhead, examining marketing expenses, redesigning the sales programs, etc.
2. Reinvent. The business world has changed. The consumer attitudes and habits are changing and the economy we have now is what we will have for a long time; it will sometimes get even worse before it stabilizes. It is necessary to examine your business and make deep changes in approach, selection, niche, pricing, etc. in your business to make certain you emphasize what is profitable and eliminate what is not. Change your business model to reflect the changing times. Importing instead of manufacturing, manufacturing instead of importing. Go virtual. Focus on vertical or horizontal growth. Add wholesale or direct sales. Hire brokers instead of developing a sales force. Reinvent your business as if it was a start-up today. Use “clean slate” thinking, start again and see what you come up with. Do not simply do the same thing you have always done. The times have changed and it's time you changed your business to keep up with the times.
3. Internet marketing. Really. Do it, there is no excuse left to support ignoring this awful opportunity. Get help if you need it, there is an ample supply of talent waiting to guide you.
These are three of the four pillows required to successfully emerge from the severe decline many small businesses are experiencing. Only doing the debt workout-the fourth pillar-is inadequate. The other three poles are required to hold up the roof. Get on board and pay attention. In this economy, there is no room for error.