Treat Your Business as a Startup

Treat your Business as a Startup

By Simon J Blattner, III and Elizabeth Conlisk

You’re not alone if you wonder what will happen to your business when Governors lift stay at home orders.

Do you open? Stay closed indefinitely? Shutter permanently?

And how do you decide? By thinking back to when you began – and treating your business as a startup. Whether you’ve been in business for two years or 20, so much will have changed in the past eight weeks that most businesses will, like you, start from a new beginning.

Treat your business as a startup that you bootstrap, meaning you use the resources you have now. No loans, no more federal, state or local government interventions designed to help businesses get started again. Expect nothing.  You are on your own.

Take a look at all phases of your business, from your business plan, to your customers, to your employees, to your financial resources, your technology, to your personal desire to work in an entirely different way. Become completely comfortable with uncertainty.

Is your business compatible with the “new” world?  If your business requires certain minimum volumes to cover your costs, do you have the resources to cover that lack of volume?  And, will your product mix, which may rely on extra charges or add-on products, create the same gross margins whether you are able to make up the volume or not?

If you can’t see yourself making it through that hurdle, you need to think seriously about whether you are going to continue.

If you have a viable business plan, now is not the right time to take on huge amounts of debt.  Money is almost as cheap as it has ever been, but now is not the right time to borrow. There are too many unknowns.  Will the virus come back?  Will my industry or sector exist?  In the time between now and certainty, don’t borrow any money.  If you have debt, and the ability, pay it back.

Once Federal support expires, banks and other lenders will have very strict lending standards.  Terms will be shorter, collateral requirements will be larger, and if you managed to get away without a personal guarantee in the past, you won’t in the future.  In the near future, even the most secure credits will require a guarantee. In a startup, bootstrap environment, an entrepreneur almost always starts with their own money.

Now is the time to review every assumption in your business and create a new budget. Make a conservative and realistic sales budget by customer. Forecast your Cost of Goods Sold and make sure your expenses are as low as possible. Only after you create a new budget will you know whether you have a business with potential.  I reiterate.  Be conservative.

After you’ve completed your business plan and sales budget, look at your people, including your role.  If you don’t have the financial resources to forgo the paychecks, don’t start again.  It just adds to the emotional woes.

If you received a PPP loan, abide by the terms. When it ends, look at your people, force rank them into thirds, and make a plan for the bottom third. Honest evaluation isn’t cruel, it’s required when you bootstrap. Treat your employees with respect, give them as much help out the door as you can – and explain what you expect to your new team.

Leadership jobs are lonely to begin with.  Instead of isolating and trying to figure it out yourself, choose your team, confide in them, get their help with your plan and execute with them.  When you show your vulnerability – and transparency – your team will buy in and trust you even more.

If you’ve been in a leadership position for a while, you probably need to make sure you and your family have the physical, mental, financial, and emotional resources for a startup.  There will be late nights, long trips, and an inability to help at home, along with fatigue and general crankiness.

To reopen your business when the orders lift, now is the time to ask yourself these very hard questions. The pandemic will cause a tremendous fallout, with clear winners and losers. Take the steps now to examine your business and see if you have what it takes to come out a winner on the other side.

May 14, 2020

Simon (Buddy) Blattner is president of GLSB, Inc., a consultancy that uses a proprietary system that small and medium-sized companies can use to assess their business in less than 30 minutes a month to drive faster decisions and better results. Buddy has been a business owner, CEO, COO and CFO in manufacturing, wholesale distribution, and branded distribution.

Elizabeth Conlisk is a project partner at M. Harris & Co., a communications and marketing firm that helps clients find the right words to describe what they do, how they do it and why they matter. We preach brevity and clarity because organizations that tell simple, compelling stories win more business. Elizabeth was the founding communications VP at the Big Ten Network in Chicago.