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It’s easy to make critical decisions for your Company in good and prosperous times. Perhaps this is because the impact of most decisions during these cycles doesn’t feel like it will hurt the pocketbooks of both you and your employees. But, all too often entrepreneurs seem to get indecisive or frozen when the opposite is true. It takes a special kind of leader to help his/her business succeed during troubled periods and lead them through it decisively and successfully.

Let’s face it. All forecasts right now are pessimistic and, at the very least, most economists don’t foresee any improvements until early 2002. So, what are you as the business owner doing to revise your business plan to help you cope and get you through? By working with the hundreds of clients at LKNS, it is clear that a good leader is one who can (1) use the financial figures of the Company to help him make decisions, (2) be more visible to his customers and employees, and (3) can react quickly and be decisive to attain certain short-term goals.

At no other time in the cycle of a business’s life is it more important to use your financial tools and management team to help guide you. There are certain items on which to focus, not the least of which is assessing your cash flow situation and monthly "burn". The use of an outside board of advisors can help you step back and make objective decisions. Also, scheduling weekly meetings with your finance team allows you to keep tabs on critical conditions. Keep an open mind, and get input from your management team in your weekly management meetings. Begin to look at your receivables - perhaps you must send out weekly statements to delinquent customers and begin calling them to set exact payment terms.

In addition, one of the other large factors that can have a dramatic impact on the bottom line in most technology companies is the cost of labor. Assess the marginal players in each department, starting with the administrative or support functions. Have a dollar figure in mind to get your labor costs in line. Sometimes you must increase salary costs in some departments, such as for a head of sales or development. You and your team must determine how long you have until you act definitively, or what the key determinants will be and when they should occur. Make a decision that if that key determinant is not met, such as additional sales figures, you will react and reduce the labor costs accordingly by a specific date. Also, look at your fixed costs. Items such as rent, health insurance and public relations (just to name a few) must all be independently evaluated to see whether reductions in these areas should be made.

One of the most notable business people of our times, Sam Walton, the founder of Wal-Mart, was partly successful due to his ability to know what his customers wanted and being visible to his managers. In addition, he traveled almost all year long and visited from store to store, to ensure that his people and that each store’s image were in sync with his vision. Being visible, showing up, and appearing like you have the situation figured out are all are true signs to your employees that you do have the situation under control. Get involved in the critical areas for the Company. If sales need a boost, step in and spend 50% or more of your time here. If technical issues need to be fixed, get involved and get it done. This will go a long way in keeping the troops positive, confident and moving forward.

You must know when to react. Many times a client comes to me when it is just too late to do anything. The use of a backup plan or alternative is critical in any course. Make sure you can always fall back on a quick change in case you have to. You must have at least 6-12 months availability of cash in order to not be in a desperate situation. Buckle down and get the job done. Focus on short-term goals that will help you to attain your longer-term objectives. Determine whether it still makes sense to invest in the technology that you are developing, or whether the market or volume is not obtainable. Work with your finance team to project out 30 days, then 60-90 days, so that you can determine where you will be. Some of the most successful clients we work with are those who, after reviewing these projections, have decided to pull the "plug", after assessing that their customer demand was just not present. Instead, they "cash cowed" their business and were able to put many millions of dollars in their pockets by scaling way back. It is the tougher decision mentally, but one that must be made. It’s difficult to admit not only to yourself but also to others you work with, that the business may need to be downsized or tightened up. But, by doing so decisively and timely, you just may make the future a bit brighter for all.