Running out of cash?greenspun.com : LUSENET : Business Owners : One Thread
What did you do when you realised you were running out of cash?
-- Peter Nicholson (firstname.lastname@example.org), February 23, 2000
I will never forget the day it dawned on me that I could be running out of cash. No, it was more serious than that. I would be running out of cash in 3 months time, unless I did something to get the sales going again. I was just about to discover that the holiday business is the greatest laxative known to mankind. My memories are that I would be letting down my staff, my customers and my family. To say that I felt gutted would be an understatement. It left a rather unpleasant taste in the mouth that I can still recall today. So, what had triggered this sudden awareness of reality. Dan Air had just sent me another bill for airline seats. Every month they sent me a bill for #50000 to #60000. It was like putting your house on the line, every month. And for fifty grand, you could buy a lot of house in London in those days. In April 1982, the Falklands war with Argentina had hit the travel business hard. People in Britain felt that Spanish sympathy with Argentina would make Spain unsafe for Brits, so sales to Spain had almost stopped stone dead. There is something about running out of cash that is really different. From feeling that everyone is right behind you and pulling for you, you suddenly feel that no-one wants to know. The truth is you do not want to admit it. You can tell no-one, or so it seems. If you want to feel really lonely, I can really recommend running out of cash. But not everyone is doomed to fail. In the end it all came right. You have to remember the bottom line is survival. That is the simple goal, the only goal. Also, you have to go into an action mode, and fast. I was lucky to spot the problem 3 months before the crunch was due. For that you need monthly management accounts. Fortunately my investors had insisted on them, and frankly, I would not have seen it coming if I had not had them. Well, not in time. Anyway, they were my salvation so I cannot recommend them more. They bought me 2 to 3 months precious time, time for me to use all the marketing skills I had ever learned, to sell more holidays. I can recall, we moved people into sales. We trebled the sales force visiting travel agents. I manned the phones to show my people, what was important to me. You have to lead from the front in such tough times. I can remember over-hearing one of them saying "Peter can sell a holiday in twice the time it takes us." Which was true. They could sell faster and better. But I needed to clearly show them what I felt was important, and get more of them out in the field, in front of the travel agents, where the action was. We ran special discounts, which we changed every week. This gave us the opportunity to contact the travel agents every week, by mailings. We zeroed in on them. Without the agents we would fail, it was as simple as that. They had to know our product inside out and feel comfortable recommending us to the customers coming through their doors. And even more, they had to like us. They say Attila the Hun said, "It is not enough that I succeed, everyone else must fail." Well I say, "It is not enough that we succeed, everyone must like us." Customers are lovely people, and we are lovely people to deal with. You have to make your buyers feel happy. Happiness and success are two sides of the same coin of wealth. Travel agents everywhere, met our child-sized teddy bear, Winston, who was the best salesman we ever had.* The travel agents loved him and remembered us. How could they forget him? He meant fun for young children who do not like holidays in the sun, nor the traveling, nor the food. Holidays in the Med are for parents, so our job was to give the kids a great time and Winston reminded agents of what we did. They linked the bear with children and children with us. So, every time a family came through their doors, they remembered us. On any unsold airline seat we had, we took them out to Spain for a day or two, to experience the product first hand and to taste the fun our clients were having. Same with the press. We took them all to Spain. There was not a worthwhile magazine which did not cover us that summer. I was even on the BBC radio for half an hour, answering questions. It was all action. But underneath, frankly I was scared stiff. After 3 months, I was so worn out with worry, I started falling asleep during the evening's ten o'clock news. I had to switch to the 9 o'clock news. But that didn't last long, because soon I was nodding off by nine fifteen. To this day, I still don't know, what did the trick? Which marketing approach had finally opened that lovely door to the sales I thirsted so desperately for. When the sales started moving, it was like standing under a shower of five pound notes. It was pure unadulterated bliss. But it took its toll. It took a year or two to realise the strain on the business as a whole. Such times drain you dry. Not just of your working capital lifeblood, cash. It also saps your strength. Some time later, we sold out to a large publicly quoted company, Owners Abroad, now called First Choice Holidays. That was my first business. This is my third. But the episode taught me one crucial and priceless lesson. Cash is king. When you don't need it, everyone wants to give it to you. But when you really crave for it, no-one will touch you with a barge-pole. So you've got to plan your cash. And plan for the worst scenario. And forward forecast. As far as you can. Tom Peters, the management guru, once said to an audience, "Look at the person to your left, then the person to your right. Only one of the three of you will be left in business in five years time." So you're not alone. But you have to really want to survive in order to pull out all the stops when you need to. * Which is why Winston took pride of place in my office at the Business Link. He had saved my bacon. My staff always thought it was because he was the brains behind the business. There again, they could also be right.
-- Peter Nicholson (email@example.com), February 23, 2000.