Take control over cash
Immediately assess your cash runway and your obligations with weekly reports of payables and receivables. Get into the weeds and identify every opportunity to cut spending, accelerate collections, and delay payables. This might include bringing services in-house, reducing headcount, scaling back on office or facility space, eliminating slow-moving product lines and selling old inventory at a discount. Your main goal is to get to a cash equilibrium to stop the downward spiral.
Reestablish communication with your creditors
Too often a company in distress stops talking to its creditors out of conflict avoidance or embarrassment. But the worst situation is for them to not know what’s going on. Go to your creditors and have an upfront conversation to repair the relationship that all too often has been allowed to lapse. Build their trust in the actions you are taking. If they are the wrong lender for your current situation, get to work on takeout financing.
Put everything on the table
Be willing to examine parts of your company culture or practices that were previously considered sacred cows. Sometimes the very thing you think is an inextricable part of your identity is the thing that needs to change. For example, if high-end packaging is a symbol of your company, hold that up to the light. Can you really afford it? What opportunities might open up if you changed it?
Develop robust sales forecasting
If your company is in distress, something is likely wrong with revenue generation. Get very disciplined about sales forecasting so you know what to expect within the next 30-90 days. Often this requires tightening up processes and ensuring you are using meaningful, up-to-date data. Reliable, timely sales forecasts allow you to make informed plans to deploy cash and/or invest in revenue enhancement with
both short-term and longer-term payback in mind.