Trade What You Have for What You Need
First, I want you to ask yourself what your company needs most. Most business owners will answer “cash” and that may be legit. Most owner’s when asked that question find themselves in a cashflow pinch at some point in time or another. But it could be that you need more customers, a revolutionary new product or service, employees, special expertise, time, or one of many other important needs that businesses find themselves in need of.
Second, I want you to ask yourself what your company has in abundance. It could be available labor, inventory, accounts receivable, expertise, goodwill, a waste byproduct, customer list, time, or, again, one of many important assets that you may be swimming in.
Next, we need a plan to turn what you have in abundance into cash, or even better, into exactly what you need right now. Admittedly, this is the tricky part, but it can be critical to pulling your company out of financial trouble or to taking your company to the next level.
In most cases you take your abundance and turn it into cash, then use the cash to buy what you need, but not necessarily. Sometimes you can trade it for exactly what you need. For example; if you take a waste byproduct from your business and turn that into a new product, take slack labor time and turn that into additional or add-on services, or assign an engineering team to come up with new product line suggestions.
Often what a company has is excess or stale inventory, that is not making you money, and taking up valuable real estate. Liquidate I say, sell it off, even at a loss if you must, and turn it into cash that you can buy good inventory with and put it in that space you just freed up.
Rarely, but sometimes, what a company has is excess cash. Man, you gotta get that cash working for you. Use it do develop new marketing channels, develop a new product or service, invest it in new equipment that will provide higher productivity and/or higher quality, and if you don’t need any of that then invest it somewhere with a decent return but keep it as liquid as possible. To simplify, make that cash work for you – for a better ROI.
Perhaps you’ve been in business for quite a while now and built a good database of customers. You will need to reach out to them for additional sales, repeat sales, with new offerings and new services/products. You can also turn that database into cash by using it to market other company’s products or services. Obviously, you wouldn’t what to market a competitor, but rather a company whose product or service compliments yours. You can sell this service to others for cash or trade it out for marketing to their customers, thereby creating a joint venture. Joint ventures, often overlooked for the saving of time or resources is a great way to pair your product or service with another company while seeking mutual benefit and increased exposure and sales.
Accounts Receivable is an asset that you can’t spend until you reel it in. You can put a couple people to work for a week or two to do their best to collect, or you can sell your receivables if you are truly desperate. And if all else fails you can turn them over for collection. Ouch.
Some of these examples may sound like desperation, and certainly desperate times do call for desperate measures, but even if things are not hopeless right now, I ask what good does excess or stale inventory do you, or slack available labor? We should always be taking liabilities and turning them into assets, isn’t that the essence of what you do right now? You take raw labor and materials and turn them into salable goods and services.
There is another byproduct of this process. You will learn very valuable things about your business when you go through this process.
I know this exercise may sound like small change in the seat cushions, but it is much more valuable than that. It can certainly help in cash flow situations, it will help you understand some of the operational issues, it can help you pivot your company to a greater or another customer need, and in severe cases it can save your company or provide you with the skills to save your company in the future.
If your company is in trouble remember that voluntary liquidation of these assets is always preferable than forced liquidation, so please do turn your abundance into your needs before things get desperate. And if your company is doing fine, use this exercise to eliminate waste and fine tune your organization. This will help prepare and propel your company to the next level.
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