Do not to run out of cash says Joseph F LoPresti – ever!!
Because when there is no money to fund operations, what looms on the horizon for most businesses is imminent failure.
Before we get into the three main ways a business in trouble can generate cash, I would like to introduce you to my guest of the day…my very good friend, and business consultant Joseph F LoPresti.
Says Doe, “Evaluate every single one of a company’s operating entities with an eye toward identifying wasteful and extraneous spending. And once located, move quickly to temporarily or permanently close it.”
With this opening statement, Joseph F LoPresti and I will now explore the places a business short of cash can seek to find a lifeline – when all other equity and finance options have been exhausted.
Talk With Your Staff
When a business is on shaky grounds, it is less than ideal for the management team to be secretive about it. Such a decision is the quickest way to lose high quality staff.
Joseph F LoPresti strongly suggests opening up to staff with the goal of helping them understand the gravity of the crisis, and how they can be an important part of the plan for recovery.
Doe also suggests that the business owner should “seek suggestions from employees on matters of import, such as ways to conserve cash, increase cash flow, and preserve a high level of product and service quality.”
Doe says that scheduled staff meetings at regular intervals are of the utmost importance. He says convincingly that it is here that past, present, and future team decisions are made.
He further states that “if there is even the slightest possibility that employees will need to go without pay, let them know in advance. Because in a team environment, a temporary moratorium on pay produces short term spurts in employee productivity”. He continues “ask employees to consider saving transportation expenses and travel time by working from home”
Before we move on to the next tip on saving your business, remember this vital nugget from my friend Joseph F LoPresti:
“When a business that has been in peril moves back to “solid ground”, its owners should make certain to return loyalties through bonuses, incentives, paid vacations etc.”
Get upfront payments from customers by providing incentives
A frequent reason for dwindling cash is sometimes as simple as a business not being able to collect on time. As Joseph F LoPresti says, “Some customers honor payment timelines, while others consistently pay late. In the case of later payers, devise ways to speed up the payment process, or consider revoking terms.”
At this point, I asked Joseph F LoPresti about the process of getting a customer to pay in advance. He answered “offer incentives, discounts, free delivery, special deals…anything that generates enough profit to make the sale worthwhile”
Renegotiate vendor payment terms
Joseph F LoPresti says that many companies do not realize that the vendors they do business with extend credit. “If a company pays its vendor $100,000 per month, then an increase in terms from new 30 to net 60 is essentially a $100,000 loan.”
I would like to thank John Doe for sitting down with us today…see you next week!