By Carroll Cobb, author of "Advice From the Lemonade Stand"

 

OK, so your business is in deep trouble.  You're facing tough decisions about its very survival.  It seems like every day, all day long, the phone rings with people wanting money from you, but the Postman brings no checks.  You're hanging on by your fingernails and you simply don't have enough cash to pay everybody.  Your credit is ruined.  Every hour brings a new crisis.  The stress is unbelievable.

STOP.  Take a deep breath and make a plan for getting through this painful time.  If you have decided to keep your business going, to refuse to take bankruptcy, and to find a way out of your situation, then you need a plan.  And you must follow that plan with the ruthlessness and focus of the guerilla warrior.  You must make an unequivocal decision to do whatever it takes to keep your business alive.  The decisions you will make will cause pain.  The guerilla warrior expects both to suffer pain himself and to inflict pain on others.  Sometimes, he must inflict pain on the innocent to achieve his objective.  He does it because he must.  Survival is not for the faint of heart or those who are too worried about what everybody else thinks of them.  Your greatest duty as the owner of a business is to safeguard and grow the assets of the business.  Your greatest enemy is debt.

RULE 1:  When you're in a hole, stop digging.

You are overwhelmed with debt because you have spent or obligated yourself for more than your revenues will bear.  It does not matter why, or how good a reason you had for your decisions at the time.  Right now you must spend only what is necessary to keep your business alive.  Conserve all funds so that you can be certain to pay the necessary operating expenses.  All others can wait.  Remember the guerilla warrior.  He is able to be effective while existing on nearly nothing.  He carries only his weapons; he lives off the land, buying nothing that does not relate to his mission; he keeps steady pressure on the enemy.  Likewise, you must make your supplies last as long as possible before replenishing; make do with your equipment by repairing rather than replacing; eliminate all spending not related to your mission; and keep steady pressure on the enemy, which is debt.  You must continue to eliminate spending until your revenues and expenses balance.  Any cash in excess of expenses should be used to comply with Rule 2.

RULE 2:  Pay off debt

You can only make use of your revenue to increase your wealth to the extent that your revenue is available to work for you.  This means that you must pay off debt so that you can operate your business debt free and have the use of all your revenue.  This will doubtless take some time, but most clients are able to be debt free within 18 months to 3 years.  Naturally, you must first and always pay the bills that can put you out of business.  These operating expenses include your rent, utilities, tax obligations, production related supplies and equipment necessary to keep you in business.  Sort your remaining bills from lowest to highest balance.  Make a list.  Pay the lowest balance off first without regard to interest rate or anything else.  As soon as that bill is paid off, take the money you had been paying on that bill and apply it to the next highest balance you have.  When that balance is zero, apply all those funds to the next one and so forth.  You will be amazed at how fast this "snowballing" effect will result in the elimination of all your debt.  When you are debt free, not only are you able to make full use of your revenues, but you will also have more energy and enthusiasm because you will feel less stressed.  This energy can be directed toward improving your revenues, or further decreasing your costs, or paying more attention to your family.  When you are debt free, you truly have options.

RULE 3:  Do not go into debt to get out of debt

You can not borrow your way out of debt!  A loan does not create capital.  It creates more debt.    A loan my make you feel better.  It may take the pressure off you for a bit.  But is does not solve your problem.  Creditors are like a "chicken a day alligator."  As long as they are getting their "chicken a day," you won't ever hear from them.  But when they start to go a few days without that chicken, you will find the hungry alligator is at your door, and he will eat up everything you have.  Avoid leases.  Lease financing, whether for cars or equipment, is the worst possible form of financing.  If you are currently in a lease, begin to save cash to purchase a replacement car or piece of equipment for cash as soon as possible.  You can do this when you are debt free and can apply all the money you had been paying to others to building up your own capital so that you can buy for cash and save.  If you think that you can afford an item because you can afford the monthly payment, you are asking for trouble.  Only through owning your own capital can you truly create and grow wealth.  As long as you are in debt, then you are a slave to the creditor.

Ask your SBDC counselor to work with you to improve your chances of survival in these tough economic times.

 

This month we bring you an interesting article on the most recent developments in social network marketing.  We also recommend that you check out the classes on marketing offered by the GCSBDC.  Marketing is the cornerstone of business development.   If your business could benefit from increased revenue, the answer lies in better marketing.

How Changes in Social Media Will Benefit Your Business

by Erin Lehr

April 27, 2010

The past few weeks have seen potentially huge developments in the social media landscape - with especially big implications for businesses.

 

Facebook continues its quest to not only maintain its status as the most dominant online community - a recent study shows that it commands 41 percent of all social media traffic - but to also expand even further. Starting this month, Facebook unveiled several new features that introduce the concept of "Community Pages," which they describe as "the best collections of shared knowledge" about a particular topic.

 

The most notable - and most talked about - change to Facebook is its replacement of the 'Become a Fan' option on a company's fan page to the more simple 'Like' option, very similar to how users can "like" the statuses, photos and comments of other users. This change enables an easier and less-committed way for users to connect with their favorite brands.

 

Community pages have big value for businesses, especially in light of a recent study that quantified the value of Facebook "fans". According to the study, each "fan" on a company's page is valued at $3.60 a piece. With "fans" now being replaced by users who can simply "like" a company, brands are now able to build communities and "fan" bases more quickly than ever before.

 

In its own quest to become a social media giant, Twitter is now launching options to appeal to businesses and brands. The company announced it would begin allowing companies to pay to have their Tweets top the micro-blogging site's search results (very similar to Google's paid advertising model). This signifies a huge move for Twitter, as it strengthens its relationships - and potential revenue base - with companies. In fact, 65% of Fortune 100 companies are now tweeting on a regular basis - representing a huge opportunity for growth and profitability. So how should companies approach the new Twitter advertising feature? Mashable, a respected authority on all things social media, gives great insight into how companies should approach the unknown - but likely enormous - potential of Twitter advertising. Similar to all digital marketing via online communities, community building and generating relevant content still remains crucial in an effective campaign.

 

These recent changes, like all new developments in the social media sphere, are still too new to be able to gauge their effectiveness on users. The only certain thing is that these developments are definitely not the last on the ever-changing digital horizon, which continues to constantly shape the realms of business and marketing daily.