Cash is Oxygen

Below are the thirteen most critical key performance indicators (KPIs) and critical drivers required for optics on running your business during a crisis. You must know and be able to report on:

1. Your current cash balances.

2. The amount of your A/R that can be collected quickly or is overdue. What needs to happen to keep your A/R current going forward.

3. Projected cash flow from operations assuming the current environment remains “as is” for 3-4 months. (Sources of revenue and anticipated expenses to service that revenue… Detailed specificity is mandatory!)

4. Actual vs. Projected cash burn rate. (This is your total expenses on a monthly basis.)

5. Your variable vs. fixed expenses monthly.

6. Payments (loan, landlord, vendors) that can be extended or delayed.

7. The source and amount of additional financing available. (This is either from your line of credit at he bank, additional bank (institutional financing), your personal funds available to be injected if necessary, or friends and family, etc.)

8. Any stray or unused assets that can be liquidated for cash.

9. The amount of your personal burn rate and the amount that burn rate can be curtailed to preserve cash for the business.

10. The excess baggage and fat that can be curtailed/delayed/furloughed/whacked in your expenses. (Frequently some muscle will need to be considered for reduction… the last thing to get cut is the bone. You can’t rebuild after the crisis if there is no bone, so be careful here. On the other hand, it does no good to have strong bones but be dead.)

11. Expansion, growth or Cap X plans/expenditures that can be delayed.

12. A detailed, specific summary of all the adjustments you either have or will make and how these changes result in your survival over the next 3-4 months. If you intend to make cuts and reductions in phases, be clear about the benchmarks and triggers for each phase. (Do the math and be clear about your assumptions.)

13. Your communication plan with your team/employees about your plan and how it impacts them. I can tell you from personal experience that if the plan is communicated effectively, it can solidify your culture… but if it is done poorly, it will destroy your culture… Be thoughtful about this. Your employees are not ignorant about what is going on and you pretending everything is okay erodes your effectiveness and credibility as a leader.