Editor’s note: Bill Warner writes “The Angel Connection” which is a regular feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share advice for entrepreneurs seeking angel investors and/or venture capital investment. He is chairman of the , an angel investor network with members throughout the Southeast.
By BILL WARNER, special to LTW
RESEARCH TRIANGLE PARK, N.C. – There is no one single thing that will protect your business in this economy. You need an array of actions to maximize your chances of getting through this downturn and pull you through what might be in store for us, whether it’s further depression or looming inflation.
Cash remains king
Have you tried to get a business loan lately? Pretty tough isn’t it? Better take a look at your line of credit and see if you can get a higher limit and a better interest rate over a longer period of time while you can.
Take a really hard and pessimistic look at your cash position. How long will it last in the grimmest of sales forecasts? Establish refreshed limits on your cash reserves and then create the cost and expense budget that would achieve it.
Have you looked at your accounts receivables and their aging? Do it now. If needed, establish new goals for collections and execute them with discipline.
Of course, manage expense
Take a more insightful approach to managing expense. It’s not just a budget cutting exercise, although you may find unnecessary things to eliminate. More importantly, it’s a matter of getting more for your dollar.
This is about working smarter, being more focused and increasing productivity. Consider things like:
• Taking stock of your knowledge of your market and determine if there are better ways to reach your customer
• Looking for ways to reach additional customers within your current market, with essentially the same marketing dollars
• Creating teams of people that look at process improvements in marketing, sales, development, manufacturing and customer support, looking for ways to be more productive. Constantly ask why we do things they way we do them. Give them a reward when they find substantial improvements
• Analyzing your lines of business, bringing focus on those that are performing poorly. Find out why and fix them or eliminate them entirely
Often overlooked, communications is even more important in tough times. When employees are left in the dark about the business situation, they will surely make things up based on any observation they make or rumor they hear. As they make up the situation for themselves, they will take care of communications for you by simply telling others what they believe to be true. Pretty soon, your business picture is painted with a brush you never held.
It’s time to over-communicate. Use whatever means of communication you have to your employees:
• Frequent all hands meetings
• Management meetings with stress on getting information to employees
• Newsletters to all employees
• Make a point of walking around every day, talking to everyone you meet
Most employees can deal with any news you give them, as long as it is the truth and you are realistic. When employees know the truth and the ramifications of it, they will work hard to achieve the company’s goals.
Get the best from the best
Take the time to realign everybody’s roles and responsibilities with the company’s goals. Everybody needs to understand what they have to do and why they are doing it. This will turn out to be a giant productivity improvement by getting everybody on the same page, and being able to clearly see how everybody’s job fits into the strategic plan for the company. It will help eliminate unnecessary work that is not important to achieving their goals.
It’s also time to put more discipline into managing the performance of people. This means setting realistic expectations, working with employees to meet them, and rigorously assessing their performance. This will bring the best forward as they rise to the challenge and will weed out those that are not been performing.
Just as in most start-up companies, you need all “A” players, because everyone has to be an outstanding performer to get you through the tough times.
Look to the future
In a way, this is all getting you repositioned for the good times. Your business will come out of the downturn being stronger, more focused, more productive and with excellent people. Take the time also to look at new business areas you might attack when you are ready to spend some of your cash reserve.
Do the market research that will lead you to new opportunities. You are looking for the next great deal in which to invest your hard earned cash. You may find an acquisition or new partner that you never expected. Your new found strength may be just what they need at a price that is very attractive to you.
About the author: Bill Warner is the Managing Partner of , a business consulting firm in the Research Triangle Park area of central North Carolina, and is the chairman of the , an angel investor network with members throughout the southeast.
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