This blog post is part of a series titled Thriving Though the Downturn: Eleven Strategies that will make your Company Boom.
If you’ve got cash, you’re still in business. The challenge is managing it. If your company is not cash flow positive, get there as soon as possible. Contrast high growth/external capital with lower growth/internal capital. How do you generate more internal cash flow? There are several areas where you can focus.
The first is revenue. Can you generate more? If you are cutting back on product development, can you rent out your fantastic product engineers, generating service revenue? For services, are you sure that are all of your billing hours being invoiced to the customer? It’s much cheaper to sell more to an existing customer than to a new one. Are there opportunities to cross sell and up sell other goods and services to your existing customers?
Look at your margins. Have you become complacent about your costs of goods sold? Is there a cheaper way to sell your product or service? Can you make your product for less? When companies are growing so fast that they can’t keep up with demand, lots of slack works its way into the system. Now that markets are contracting, this is time to look at the entire value chain to see how to drive more margins out of each sale.
Offer special offers to customers to incent them to pay more or to pay sooner. If you are renewing maintenance contracts, can you renew them for a longer term if the customer will prepay the entire amount? Make sure that someone is staying on top of receivables and hounding (politely) slow payers to get your invoices paid.
Everyone is offering deals out there. Thinking of moving? You can lock in some great rents in some cities. Ask your suppliers for discounts. They will be happy that they still have your business. Don’t just look for deals; be proactive about asking for them like you’ve never done before. You’ll be surprised at the deals you can get.