by David Capece, Managing Partner
“I’m unemployed and not collecting a paycheck. I just want some work to make myself useful and pay the bills.” These words of desperation are being echoed across the nation. With this economic backdrop, bootstrapping has never been more critical. And it actually might be easier than you think. Below we share 10 tips to help you make it through the tough times.
1) Be Honest. For best outcomes, it is important to be honest with yourself, your team, and your investors. Hoping for the best-case has caused collateral damage to Bear Stearns, Lehman Brothers, Fannie and Freddie, and many others. Look yourself in the mirror and say, “The Dow is down from 14,000 to 7,500. The economy around me is cratering. How will my business perform if we muddle through the rest of 2009, or worse yet, if things take another turn downward?”
2) Develop Monthly Financial Projections. In the past Wall Street has been criticized for their focus on quarterly results, removing long-term focus. While I love the big picture, today is about surviving the short-term. You should have monthly financial revenue goals and expense estimates. And you should do your best not to fall behind.
3) Focus on Revenue. Revenue goals are a measuring stick and give you something to rally around. Everyone in your organization should know the revenue targets and be working towards them. In the unfortunate event that you need to layoff workers, be sure to hold onto those who are directly delivering revenue. You need to recognize that your sales team is more important today than it was 2 years ago.
4) Overdeliver to your Customers. Your customer is king today. Keep a pulse on what your customer wants and how you can exceed their expectations. When you go the extra mile and satisfy their needs at an affordable price, they are more likely to return and recommend you. As Fast Company says, Value Proposition is King.
5) Prioritize your Initiatives. Ambitious leaders tend to tackle a number of opportunities at once. The price to pay for lack of focus is higher now than ever. Focus on your core, revenue generating business, and minimize distractions. A clear objective and an unobstructed focus increases your odds of success.
6) Get more out of Your Team. With unemployment surging, the days of the primadonna worker have past. Your team likely has an increased appreciation for their job and paycheck, and that can work to your advantage. I hear many executives talk to their team about the need to work harder and smarter. It’s no longer acceptable to slide by with a “B”. Ask your team to pull together in these difficult times to contribute more.
7) Reduce the Fat. In 2009, a company is healthier when lean. Most people immediately think of layoffs, and you should give a good hard look at your staffing. Entrepreneur.com says to minimize your full-time staff. There are other options such as reducing unnecessary travel, revisiting your contractor arrangements, negotiating better deals, and even finding cheaper office space.
8 ) Become more Nimble. Fixed expenses make it difficult to make changes on the fly. Part of the issue with GM, Chrysler and Ford is that they have enormous teams that receive ongoing salaries even if they are underutilized. While layoffs are painful, you may be better served having contract or freelance employees. There is an enormous supply of talent out there that you can tap into affordably. Bring people on for specific projects and pay them only for completing their focus initiative. You may have an added benefit of saving payroll tax and healthcare benefits.
9) Collect your Bills. So many companies are having trouble, so stay on top of your receivables. It keeps your cash flow going and will help you avoid a write-down in the future. All you need to do is stay a little more proactive on following-up on outstanding bills.
10) Provide Leadership. While the first 9 items have been more tactical measures, the 10th may be the most important. In times of crisis, we look for leaders to emerge. Your team is counting on you to provide leadership. So are your customers. Be sure to communicate that you are taking proactive steps to emerge on the other side of this recession as a stronger company.
For further reading, check out Guy Kawasaki’s blog on bootstrapping and VentureBeat’s article, “The Art of the Bootstrap.” And remember, the lessons you learn from bootstrapping will make you that much more successful when the market turns up.