No ostriches: Don't ignore bills during a cash crunchNo ostriches: Don't ignore bills during a cash crunch
Money is tight, business is hard. Entrepreneurs can't avoid the tough conversations, though. Consider this advice during difficult times.
June 27, 2023
This is another tough love article, but it is an important message to share. I get it; things are tough right now. I know; I am right beside you. I've written about the challenges of capital and the costs of growth. How you respond to these challenges will define you as an entrepreneur, business owner and human being.
I have a unique seat at the table. I am right across from you and your struggles. But I also sit with my fellow vendors, service providers and trusted advisors.
What I am witnessing and experiencing is concerning. As the availability of cash becomes increasingly limited and the cost of growing your business continues to rise, too many of you are becoming ostriches: You are burying your heads in the sand, avoiding the tough conversations. Bills are not being paid or, at best, are being paid late or partially. The cash crunch is real, but you need to do better.
Your brokers, marketing agencies, social media teams, merchandising groups, lawyers, CPAs, trusted advisors, etc., depend on you to pay your bills. They have expenses, people and cash flow concerns just like you. The tough conversations need to be had.
If you find yourself in a situation where you don't have the cash available to pay your bills, don't just stick your head in the sand and hope you don't get that dreaded phone call or email. Reach out, be proactive and be a professional. Have an honest conversation with your providers. Most will understand and will be accommodating. But expect a reduction or a suspension in service. Don't make things binary, paying in full or not paying at all. Offer to work with them on a plan. This could be a creating a payment schedule, agreeing on an equity trade or using one of the instruments I've discussed in previous articles, like the CARE. They need this information so they can manage their cash flow.
I will also reach out to my fellow providers: This is not a time to confuse being nice with being kind. To be transparent, I've been conflating the two. To be viewed as supportive, empathetic and generous, I, too, have avoided hard conversations and it's negatively impacted our cash flow. Being nice doesn't serve either party. We aren't holding each other accountable. The entrepreneur needs to pay for services rendered. We must be accountable for doing what is needed to run a healthy, viable business. Reducing or suspending services allows us to focus on expense reduction and business development. In my case, it also affords me the time for outreach to investors, encouraging them to unlock money utilizing more aligned terms and structures—something that is beneficial to us all.
We often refer to this industry as an ecosystem because we rely on each other and our collective consumers. The collaborative approach has served us well. Working together to solve problems and having open and honest communication is at an even greater premium in these challenging times. A by-product of those discussions is the deepening of loyal, mutually beneficial relationships that will pay big dividends in the long term Let's not be ostriches.
Elliot Begoun is a 30-year industry veteran, author, podcast host, founder of TIG Brands and champion of Tardigrades. TIG Brands supports a community of entrepreneurs interested in building nimble, capital-efficient, resilient brands that become Tardigrades, not Unicorns. Learn more about TIG Brands’ programs.
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