What Marketing Budget?

When a business finds itself in financial trouble there is an inherent meaning which most consultants don’t get. The business has ‘financial’ trouble. It needs every dollar to survive. The last thing they need is another marketing budget for that campaign to get more leads which presumably will get them out of trouble.

We need to understand that there is no money left (well maybe a little bit).

We need to fix the cash flow first, cut cost, chase payment, move (not make) some cash into the bank (if there is any), and fix the fundamentals. Then we have a little bit wiggling room. These precious resources are all they have. That’s it, there is nothing else. If it is not enough then that’s it – it’s not enough – start to think about an exit strategy. The more time is wasted the worse it will get.

But don’t lose hope because it might be just enough for us. The challenge is to use these little resources to turnaround the business. And this is when we get a bit ‘creative’. The words ‘free’ and ‘creative’ will be your best friend in the next few months. In order to make all of these to work, we need to be creative in using freely available tools around us. The internet is a great place to find them. But also do some outreach to your friends, families, etc. – not to get free money but free contacts, advice, knowledge, etc.

Fix the fundamentals, hang on to every resource, and be creative to get and use more resources (free is preferable). Then we will have a good shot to turnaround the business.

Now one more thing. While it is great to have a strategy, the real impact will happen during execution. And things will change, the great strategy will be rewritten, and execution will stall.

So persevere, be flexible, focus, and take it one step at a time. We might not have the big budget enjoyed by larger companies. But our mind and mental strength will make up for it.

 

 

Breaking Point

Have you ever heard the story about a frog that gets boiled alive?

Well, there’s this little frog. It somehow ended up inside a big pot of water which was conveniently put on a stove. The stove was on by the way (but only with low fire) which means water got slightly warmer, then slowly got a bit hotter, and a bit hotter. Interestingly the frog didn’t try to jump out of the pot. Instead, it just sat there not moving a single muscle. So the water got even hotter until it finally reached boiling point. The frog didn’t move at all (you wonder why).

It eventually died, boiled alive.

This didn’t happen, of course, no frog was harmed during the writing of this story.

It could happen though. The science behind this is simple. The frog adjusted itself to the increasing heat of the water because it got hotter slowly. The poor frog would have jumped out of the pot if water got hotter quickly. But it didn’t, so it decided to stay and try to overcome (and persevere) in the midst of hot water. It got used to the new heat and when the heat went up it adjusted itself again. Then the time came when it was too late. It got to the boiling point and the frog realized it lost the battle – it was boiled alive.

Let’s use the same principles in overcoming tough times in business. The question we need to ask ourselves is similar to the frog. “Am I being boiled alive and I don’t even realize it?”

We also tend to adjust ourselves to difficult times. We become stronger so we could face adversity. There’s nothing wrong with that because it’s us (the person). What doesn’t kill us makes us stronger. It is very true indeed.

However, when we go through tough times in business it’s not only us that gets pummeled. It is the business itself also. So let’s rephrase the question a little bit now focusing on the business. “Is our business getting boiled alive and I don’t even realize it?”

Business is made up of different substances. Its blood vessel is filled (as you have probably guessed) with “cash”. While its infrastructure is made up of a complex relationship between owners, staffs, customers, suppliers, and other stakeholders the whole thing is run with cash.

Now, with tough times this complex infrastructure is damaged. Unlike the human race, a business does not get stronger after getting damaged. For example, a brand does not get stronger after it got bad publicity. A business does not lose customers and gets stronger as a result.

The people inside the business got stronger though. However, these experiences, skills, and everything else that the people learn during difficult times – they don’t always stay with the business. They move around following the footsteps of their owners.

The business itself would suffer. Its complex infrastructure split, its ability to earn and keep cash broke down. It would do that until such time that it would completely break. That is the breaking point.

So what’s the point of all these you might ask?

It is crucial to know the breaking point of your business.

As much as we want to persevere during tough times our business is separate from us. It does not have our brain, heart, and soul. We are the brain, heart, and soul. Just like the frog, we cannot control the heat around the business. On the other hand, we can control whether we want to make the jump or not.

Do you know your business’ breaking point?

 

 

Know Your Numbers

People ask me what the first thing to do when a business is in trouble. The obvious answer is “Cash Flow”. Cash is king – everyone knows that (almost everyone). So unless cash position is healthy everything else will fall apart. Fix the cash, stop the bleeding, then panic disappears and calmness ensues.

What the not so obvious answer is this: “know your numbers”

Before we try to fix cash flow it is imperative that we know the numbers. Everything from sales figure, profit & loss, cost of goods, cost of operations, hidden expenses, and so on. If we are to have a chance to get to the bottom of the pit we need to keep digging .. and keep digging.

Some people are happy enough to get “an idea” of where things are – trusting their gut feeling and intuition. There is nothing wrong with gut feeling and intuition. Those are important to make a quick decision. But when the time comes to make a more involved and analytical decision such as “where to cut cost that does not affect the core business” – intuition can be misleading.

Knowing your numbers can be heart-breaking. Most business owners in trouble might avoid this because they know the numbers are bad. They couldn’t face reality. Some convince themselves into denial – hoping and praying that everything will turn around tomorrow, or the next day, or the next day.

The problem is of course, the longer they wait the worse it will get. If you cannot do anything with the business then at least do something else. The point is, you have to do something. And all of these start with knowing your numbers.

Knowing your numbers will not kill you, not knowing your numbers will.

A lot of things in a business are out of our control. We can only do so much, try to anticipate, be pro-active, and response to the best of our ability. Everything else is not our problems because we couldn’t control them anyway.

So don’t feel bad or afraid, we are only humans. In other words, don’t be too hard on yourselves. Know your numbers and improve, or exit and do something new.

 

Money The Necessary Evil

The only issue with money is either you use it or it uses you. How does that happen you might say. In reality, it doesn’t. It’s just an excuse we use when we couldn’t control ourselves when it comes to money. We are always in control, money is not.

Have you ever thought about how much money you can make? Or will make?

What about how great business will be if it makes ten times more than it does now?

It is the main currency used by most advertisers. It is how we measure our success, our dignity, our legacy. It is why we rank people based on their wealth.

Let’s face it money is addicting, probably the most addictive substance in the world.

We forget there are other more important things. We forget that money is temporary. We forget that money is only a means to an end. We forget that money is not the end goal.

But talking about a small business we cannot argue that money (or we prefer to call it ‘cash’) is necessary. We must not forget though that it is only necessary to a certain extent. A good business is not focused on cash, albeit it cannot function without it.

So how does this intricate relationship work? We need cash but we don’t want to focus on it? But if we don’t focus on making money how on earth are we going to build a great business?

In every great business, the focus is always on the customers. They exist to solve customers’ perceived problems. These problems do not have to exist – they only need to be perceived to exist. So if you ever felt ripped off by certain businesses, most probably because you are being ripped off. And this is how certain products command such high prices – because they solve ‘perceived’ problems that might not exist in the first place.

Anyway, back to our original discussion.

Regardless of how much you can rip off your customers by creating certain perceived problems and then charge an exorbitant amount to solve them, the focus is still on the customers. The exorbitant amount is the after-effect. Once you start focusing on the money your effort will shift to short-term activities such as reducing operational cost, renegotiating with suppliers, and so on. Not that these activities are bad – they are necessary but they are not the main focus. Your customers will figure out quickly if your business is solving their problems or not. They will sense very quickly if your only interest is their hard-earned cash.

Focus on solving their problems and they will never feel that they are being sold to.

Money is required to fund all these operations but it is never the focus. Never let the temptation of making money pull you down into never-ending addiction.

Startup Illusion

Starting a business can put someone’s mind into overdrive. It will then either shut him down or propel him forward. The euphoric moment will last as long as financial resources have not dried yet. With enough funding, the startup party can sometimes last for years. It is only after investors start demanding (sometimes not so) reasonable returns that the party turns into a big reality check. The dreams have dissipated into thin air, and cloud of judgement descending onto earth.

Party is over.

That’s the hard truth of starting a business. It will get worse before it gets better (if it does get better). Starting a business is like eating a box of chocolate – mixed with some not so edible foods. You never know what you’re going to get but the only way to find out is if you keep eating. In business we never know what tomorrow will hold, it can be a disastrous day or a day when we beat all sales record. The only way to find out is if we wake up in the morning and go to work. The only way to eat the good chocolate is if we keep eating the bad ones.

Some people are addicted to starting businesses. They have brilliant ideas, get the funding,  and off they go with an exciting venture. They don’t however stay long enough to feel the downturn, the heartbreak, the never-ending pressure, and the struggle. When things go south, they are the first ones to pack up their bags and go – some of which utilise bankruptcy regulation to move on.

Some people however, are born to build businesses. Not only that they will start their businesses themselves but they will also see to it that their ventures are successful before they move on. If things go south, they will be the last people in the company to pack their bags. Some might take part-time jobs to help with the cash flow.

There is one distinct difference between real entrepreneurs and wannabes – perseverance.

The startup illusion might be alluring but the hard reality is not as glamorous. Starting a business is hard work, it requires sheer mental strengths more than mere intellects or skills. Building a business is about getting up in the morning, go to work not knowing what will happen that day, persevere throughout the day, and then do it again the next morning.

“Being an entrepreneur is like eating glass and staring into the abyss of death.” –Elon Musk

The Call of a Busted Region

In the past few years Australia has faced one of its darkest moment in economy. The ten years mining boom busted leaving trails of destructions along its previously glorious paths. Businesses succumbed to the crisis, closing their doors, loosing millions in the process. The trickle down effects continued for years affecting even those mom and pop businesses around the corner.

Gloom and doom is the mood.

Unemployment is on the verge of a dangerous level. Government is scrambling to control its finance, trying to off-load some of them onto the tax payers. The strengths of dominance from large conglomerates keep the cost of living at unsustainably high level.

Has the long search for wealth completed its journey? Is there anything left to find? It is a moment of despair, yet opportunities are abound for those lucky enough to have left-over resources. Those with resources are feeding on the battlefield. The wounded and dying have given up. The rich gets richer and the poor gets poorer.

The lucky country is not so lucky anymore.

Should we give up?

Do we have the strengths to carry on?

These questions mark the beginning of another journey. It is through adversity a person grows stronger as those who tried to kill him has failed. The survival alone is enough testimony to the strengths required to carry on.

It is only at the bottom of the pit that we have the moment to find the strengths to carry on.

While opportunities have dried up for most people, those who survive are sitting in a pool of hidden gems. The dust has not settled yet but the smell of money is permeating the air. The call of money is echoed through the regions. Those who are brave enough will stand up and dust off their gears.

They are ready for the next challenge.

They are ready to answer the call from a busted region not yet finish with its blessings.