Many small businesses emerging from the most recent economic downturn still face serious challenges that could put them at risk of bankruptcy, says Susan Tose Spencer, an entrepreneur and former minority owner, general manager and vice president of the Philadelphia Eagles.
Spencer owned a small meat packing company that eventually failed. Her company was more than $1 million in debt.
"I owned a company that inevitably failed and remember the financial toll and the emotional beating that goes along with trying to save a company on its last legs," Spencer says.
In her words, the following are the five strategic moves Spencer made:
Tip 1: Face the Truth
- Is your company running a negative cash flow on a regular basis?
- If the answer is yes, its time to consider your options.
- Are you prepared to put more personal money into your business?
- If the answer is no, you probably will not be able to arrange a loan from any conventional sources and unless you can quickly turn around your cash flow you might run out of gas.
Tip 2: Maximize Your Cash Management
- Can you stretch your payables further by negotiating longer payment terms?
- Can you speed up collection of your receivables?
- Can you reduce your operating expenses and furlough or convert employees to part-time workers?
Tip 3: Look Objectively at Hard and Soft Assets and Customer Lists
- If you have been in business a few years, it is likely you have transferable assets with real value (actual and intangible) to a competitor.
- Examine your unique systems, formulas, and operating procedures that can add value to another company.
- Take a thorough inventory of everything the company possesses.
- Examine your customer list one customer at a time and consider how each customer would fit in with another similar company and whether you could convince them to make that transition.
Tip 4: Identify Competitors That Might Be Interested in Your Company
- The most positive solution to closing a business is to find another company that will benefit from what you have and will pay money (or assume debt) for it.
- Select no more than 2 potential targets( your best pics) because if the word gets out that you are selling your company you might lose customers and employees before you can work out a suitable transfer.
- Remember this is a "beauty contest" so plan every detail before you approach a competitor and keep it 100% positive.
- Before you "pitch" a competitor know what you want out of the deal.
- Keep your activities under the radar screen for maximum benefit.
Tip 5: Know What you are Selling and Have Facts and Figures Ready
- Make sure you exchange confidentiality agreements before you start.
- Give your best sales pitch on how your competitor will benefit by adding your company and its customers.
- If there is real interest walk away with an agreed upon outline.
- Follow-up quickly and try to wrap up the transfer in 30 days max.
- Make the deal and take a long, hard, sigh of relief, as I did, that you can walk away with something to show for all your effort and then move on!
Susan T. Spencer is an entrepreneur, award-winning author of BriefcaseEssentials, lawyer, and former minority owner, GM and VP of the Philadelphia Eagles Football Franchise. Spencer has spent the last 25 years owning and running her own companies in exclusively male dominated industries after turning her back on the "corporate world." Her stories and examples are authentic, and her advice for women in business, who own a company, or who are thinking about starting a business is direct, practical, pioneering, and barrier breaking. Spencer attended Boston University where she earned a bachelor's. She later received her master's in Education/Economics from Hofstra University and received her law degree from Villanova University.