As a manager, how can you save your company from going bankrupt?
I want to know how you would manage a company that is going to fail. Should I give up or should I continue?
To me the first step would be to take a hard look to decide if the business is worth saving. If it doesn't have the potential to be a good business it might be better to let it sink.
If you and anyone else involved decide it is worth saving then you need to really do a deep analysis to understand where the problems are in the business. You need to look at every aspect of the business from marketing, to operations to sales. You need to look at your products or services and understand which parts of the business are generating income and which are not.
Next you need to look at every expense. There are most often ways to cut expenses and expenses that are not necessary. Shop around on things and see if you can cut 10% off your expenses. Look at your pricing. Where can you increase prices with minimal effect on sales. Look at your staff. Are there people you don't need.
What you really need to do is increase profits and reduce expenses. You need to understand what things really cost and what your expenses really are. You need the right people. You need the right processes and you need the right products or services.
Back during the housing crash I seriously thought about closing my business but I liked the business and felt it could be profitable even though we lost $ 180,000.00 that year and had lots of bills we couldn't pay and almost no money left. We did pretty much what I suggested that you do. We looked at all our expenses and were able to reduce them from 51% of sales to 40% of sales. We looked at each product and found lots of areas where we could increase prices without losing business. We did get a small influx of money through some credit cards with 0 interest and started taking every cash discount on all our purchases and got away from paying late fees. Within 90 days we had a cash reserve and became profitable. Now the business makes more profit as a percent of sales than most businesses.
If you extend terms /credit pursue your accounts receivable to bring in cash flow. If the debts are over 90 days they should go to a collection agency. For your accounts payable you should contact all your suppliers and explain your situation, tell them you cannot pay them in full all at once but will make partial payment and intend to pay off the balance . Most importantly communicate with them regularly and be honest.
If you are the manager and NOT the owner, if you have that much insecurity in the success or failure of the venture, do you really want to be the one that will be tagged with going down with the ship? That would certainly NOT be something that will look good on a resume.
However, if it is YOUR business, the responses from Ray and Brad make sense. Good luck in your quest for clarity.
There are four major (and fundamental) areas where business failure occurs:
1. Having the wrong product
2. Selling to the wrong customers
3. Poor planning and a lack of strategic thinking
4. Poor execution
In analyzing your company’s situation, I suggest starting with a critical look at your business model. Each of the categories that make up a business model:
a. Customers segments
b. Customer relationships
c. Value Proposition
d. Key activities
e. Key resources
f. Key Partnerships
h. Revenue Streams
i. Cost Structure
should be reviewed as if you were just starting the business. In other words, if you were an entrepreneur looking to start a business like yours, who would be your “perfect” customer? What would they need, want and pay for? How would you provide your “it” to them in the most economical manner and at the most profitable price? Who would you involve to help you execute your plan?
If you analyze your business based solely upon its legacy activities, you will be working within the confines of an existing framework — which appears not to be working. By starting with a “clean slate,” you will have the freedom to eliminate what and who is not now optimizing the creation of value for your customers and the business — or add whatever would create that value.
Without knowing a lot more about your particular business, it is not appropriate to make specific suggestions. Although increasing operational efficiency can save money, as has been suggested, I would start with analyzing the continued viability of your existing product or service.
Unless every one of your customers is demanding more than you can deliver of what you currently offer — and at a price that allows a significant profit per customer, I would initiate up face-to face conversations with your primary customers.
The primary purpose of this tactic is to find out if your existing product(s) or service(s) still meet their needs. This “re-validation” conversation should also include how they perceive your “post-purchase” customer service. Too many things change that can negatively affect a customer’s need, desire or ability to pay for any product or service. Perhaps they have been offered a better/cheaper/newer product or, as your business has deteriorated, it may be that your “customer service” efforts have weakened?
By the way, it is neither adequate nor useful to hear (or accept) that they are simply “satisfied”. It is vital, however, to find out what is working for them and what needs to change in order for them to remain your customers. At the same time, you can get a better handle on what your competitors are offering them. If your business is in trouble, your competitors probably know, as well. If they are not already doing so, they will be inundating your customers with their own “new and improved” offers.
If these conversations yield a positive response, you will know that, should your business be able to continue, those customers are still ready, willing and able to pay you.
Of course, all of this is dependent upon your owner(s) being able to accept that things are going wrong. If they are too determined to stay the course, any suggestion of a course correction may fall on deaf ears.
Hope this helps.