Who it's for
An owner facing a cash gap, a collapse in demand, the loss of a key customer or the departure of the team.
Key idea
First you stop the cash outflow and restore visibility. Only then do you make strategic decisions. Otherwise they're made blind.
Contents
- Days 1–3. Visibility
- Days 4–10. Stopping the outflow
- Days 8–15. Holding on to what works
- Days 15–25. The cause
- Days 25–30. Scenarios
- What to do this week
Take the self-assessment
A crisis distorts your sense of time. It feels as though everything has to be decided at once. In practice, the first thirty days follow a strict sequence, and getting the order wrong costs more than reacting slowly.
The basic rule
In a crisis, you don't optimize. You stabilize. Optimization is work on a horizon you don't have right now.
Days 1–3. Visibility
The first task is to see the picture. Most crisis decisions are made on outdated or incomplete data, so they miss.
- A daily cash report: balance, incoming payments, mandatory payments for 13 weeks ahead. Weeks, not a month.
- A full list of obligations with dates and the consequences of missing them. Divide them into: critical, negotiable, can be postponed.
- A list of incoming payment sources with probability and date. An honest probability.
- The point of no return: the date the money runs out under the current scenario. This is your real planning horizon.
A typical mistake
Cutting costs before the picture is built. Marketing is usually cut first, and two months later revenue falls on top of the crisis. Visibility first, then decisions.
Days 4–10. Stopping the outflow
Now you can cut, but by the reversibility rule, not by the size of the line item.
Category Decision Logic
Costs with no effect on revenue or obligations Stop immediately Reversible, quick effect
Costs with a delayed effect on revenue Cut partially, while measuring A full stop will create a second wave of crisis
Costs that support current obligations Don't touch Failing on obligations sets off a chain reaction
People Decide after the first three categories Irreversible, and expensive if you have to rehire
In parallel, negotiate deferrals. The key is to go to creditors and suppliers first, with a plan, before any payment is overdue. The difference in attitude between "I came early with a plan" and "I didn't pay" is huge, and it determines how much room you'll have.
Related service: Cost Optimization
When you need to cut without destroying the ability to earn.
Days 8–15. Holding on to what works
In a crisis, attention goes to the problems, and the working part of the business is left unattended. This is the second wave of losses, and it almost always comes as a surprise.
- Identify the 20% of customers who provide most of the margin. Contact each of them personally.
- Identify the people without whom the process would stop. Talk to each of them honestly: rumors are worse than bad news.
- Don't stop an acquisition channel that pays for itself. A crisis is a bad time to lose your inflow.
- Write down what you won't do over the next 90 days. The list of refusals matters more than the task list.
Companies more often die not because they couldn't solve the problem, but because while solving it they stopped doing what brought in money.
Days 15–25. The cause
Only now, with the bleeding stopped, does it make sense to look into the cause. Not earlier: under pressure, diagnosis turns into a search for someone to blame.
The key question: is the crisis external or internal? External means the market, regulation, the exchange rate, a major customer leaving for their own reasons. Internal means the model stopped working, the economics hadn't added up for a long time, management couldn't cope.
The honest answer is usually mixed: an external event exposed an internal weakness. This matters because it determines the type of solution: survive and return, or rebuild and not return.
Related service: Crisis Management
When you need an outside view at this step: inside the team, objectivity in a crisis is almost impossible.
Days 25–30. Scenarios
By the end of the month, three scenarios should be formulated, with criteria for choosing between them. Not one "right" scenario, but three with conditions.
- 01
Recovery
The model works; the event is external and finite. The task is to hold out and come back. Criterion: the economics added up before the crisis and will add up again once demand recovers.
- 02
Restructuring
The model has stopped working. The task is to change the offer, the segment or the cost structure. Criterion: there are resources and time for the transition.
- 03
Managed exit
A sale, a merger, winding down a line of business. This is also a decision. Criterion: for the owner, the cost of continuing is higher than the cost of exiting.
About the third scenario
It needs to be said out loud, even if it isn't chosen. A scenario that's forbidden to discuss distorts the assessment of the other two: you start trying to prove to yourself that the first one is possible.
Related service: Business Model Transformation
If the second scenario is chosen and the model needs to be rebuilt.
What to do this week
Questions to ask yourself
If you're in a crisis right now, start with these five
- 01 On what date will the money run out under the current scenario?
- 02 Which costs can you stop today without affecting revenue or obligations?
- 03 Which creditors haven't you spoken to yet, and why are you putting it off?
- 04 Who are the 20% of customers you can't afford to lose, and when did you last speak with them?
- 05 Did the crisis expose an external event, or an internal weakness that was there before it?
Materials that continue the topic
- The cost of doing nothing
- When the model stops working
