The main point you need to address in any financial recovery plan is the minimum amount of cash flow you will need to sustain your business during slow periods. Sit down in a quiet place where you can concentrate and list all of your fixed expenses first and then your variable expenses. Add about 15 to 20 percent for miscellaneous things that could come up, because they always do. Add up everything to see what your monthly total is. If you don’t have enough money coming in to cover the amount, turn the list face down and list your expenses again—but this time try to list even lower amounts for each item. This may sound a little low-tech, but it often helps to see the numbers on paper in front of you. Do this every week or so to see whether anything has changed or can be adjusted.
When you know what you will need to keep your business going, you can use that information to plan how to get the cash flow you need. Most fixed expenses are not negotiable—or are they? Many times I have contacted our office landlord and asked to pay 20 or 30 percent lower rent during tough times and add it to the end of the lease. Or you might offer to extend your lease by a year if the landlord gives you a month free now. If you’ve been paying on time for several years, there’s a good chance the landlord will work with you.
If you have a vehicle loan or a credit line to pay, you can sometimes miss one payment a year with no penalty—just call and ask. The interest accrues, but this respite may provide the short-term relief you need. Many credit card companies will also work with you on lower monthly payments and may reduce the interest rate for six months to a year—ask them. No one wants to put you out of business; they just want to be paid, so tell them how you can do it. Make the first move—don’t wait until they call you about a past-due account.