How Far You Plan is How Long You Last
March 27, 2020

How long can your business last? 

It’s a scary question, but one that every business owner (both AV and outside our industry) should be asking. To find the answer, we have to look at cash flow. It’s crucial for staying in business during the current global situation.

Cash is what allows you to stay afloat. The more money we hold on to, the longer we can survive and be ready to move our businesses into the future. 

How do we make your cash go farther? 

It’s not about hoarding — it’s about making choices that help us keep the business alive until our work returns. 

Here are two choices you need to make today: 

1. Downsize At Once 

When faced with the reality of downsizing, our human nature tells us to cut back in phases — starting with the worst employees and progressing from there. As much as I sympathize with people who lose their jobs right now, it’s better for the business to get all of the necessary layoffs done at once. 

Incremental layoffs are terrifying. Let employees know what’s going to happen so they can start preparing for the outcome. 

Plus, this frees you up to hold on to your cash longer, increasing the odds your company can rebound. It is devastating to lay off employees, but necessary in order to have a company that can one day hire them back.

3/27/20 Update: The CARES act will apparently allow you to rehire or reinstate laid off or furloughed employees using a government backed loan to cover payroll. The details are evolving, so be patient and we will see how this works.

2. Focus on Cash — Not Profit

No one is going to make a profit for the next few months. However, you still have some ways to bring in cash and cut spending. Make lists about where your income and savings could come from right now, like this: 

Screen Shot 2020-03-27 at 2.58.37 PM

Then, plug your numbers into a spreadsheet. Don’t rely on QuickBooks. This requires using old-school spreadsheets like this to your advantage. 

Here are the five key components to factor in: 

Actual Cash

Start by entering the actual cash in your bank account and work from there. (Don’t rely on projections. Use your real-time balance.) In doing so, we’re trying to move the point at which our cash hits zero as far away as possible. 


Write down every client from whom you can collect receivables. If you need to negotiate to an amount they can actually pay, do it. That may mean taking 25% less, but whatever you can collect in the next 30 days may be all you get. 


Payables are all about prioritizing. Decide who you’re going to pay, when you’re going to pay them, and how much you’re going to pay them. 

As for payroll, move your payroll to weekly. This benefits everyone. Your employees are insecure. They don’t know what’s going to happen next. Paying weekly puts money in their hands and helps alleviate some of that stress. It also helps your business. By spreading out your payments, it may buy you more time. 


Look for ways to defer, negotiate, or eliminate every line item under your expenses. Maybe you can defer rent for two months, then pay 50% for a few months. More time to pay extends your business timeline.


When you run out of cash, look to your financing options. You can open a line of credit and/or credit cards. Creditors still want to loan you money. You’re a good risk for them to take. Don’t be embarrassed or afraid to use your credit. These are tools that will help you keep your business going.

3/27/2020 Update: Any stimulus loan or direct payment would go in this section. Timing still matters! Pay attention to when money arrives and then goes out. 

Plan to Outlast the Crisis

The Cash Flow spreadsheet is a simplified model of crisis planning, but helpful nonetheless. Consider it a starting point from which you can work. Update it regularly. 

If you have cash coming in, you can properly time what you send out and work to extend the life of your current cash as long as possible. 

Also, don’t forget to apply these same principles to your personal life as well as your business. The value of the money you save in the early weeks is compounded going forward. The earlier you decide to save, the more valuable it is and the more it’ll work for you in the long run. 

Your job right now — personal and business — is to reduce your fear of the unknown by clarifying as much as possible. 


How much money should I borrow? 

Here’s the rule: Borrow enough. 

Borrow enough money to provide you at least one month of breathing room so you can work without having to run back to ask for $2K increments. Think of a loan as an investment in your future. Today you have little or no business, but you will soon. 

A loan is an investment in a viable business with assets, reputation, and intellect that will be in demand in the near future. Right now, you’re a startup that’s already done the hard work. All you need now is revenue. Loans are your friend — and you may need to go in debt to keep your company going.

Who should I pay?

Pay the “little guys” something… and pay them first. You were a freelancer or contractor once. Remember what it’s like? Reliably paying your regular workers cultivates loyalty. The faster and more often you pay people, the more loyalty you’ll get. 

There’s more flexibility with your larger payables. Notify them of your plan to pay them eventually and keep the lines of communication open.

Your state and federal tax payments are delayed. Get online and keep up to date about what you can avoid paying for now. 

Ask everyone else for a 90-day grace period, even if it’s just to buy time so you can figure out what to do next. Anytime you talk to these companies, specifically say, “Due to the loss of income as a result of the COVID-10 pandemic…” This terminology allows them to make accommodations they otherwise couldn’t.

How do I collect from people who owe me?

Collect anything you can now — even if you have to negotiate down. That cash extends your calendar. Don’t get hung up on the profitability of past jobs. Focus on the current cash flow. Get the cash in hand and spend as little as you can. 

Be ready to push. You’ll have to negotiate harder than you’re used to. To strengthen your case, let them know what you’re doing with the money, like “We’re paying our workers and keeping our healthcare intact.” 

If you opt for a line of credit, be explicit about needing 90+ days of grace. If you have credit card options with low interest and/or a grace period, take the offer. That doesn’t mean you have to use it, but it’ll be available if you need it. 

When possible, get creative and barter. Talk to your network — who owes who? Maybe you can trade services or equipment. 

How should I handle deposits?

Most clients want a 100% refund for canceled shows, but that doesn’t follow your terms and conditions. We have no rules for how to deal with this. While we know we’ll have to fix this moving forward, for now, we can start working from this strategy:

  1. Document the work you’ve completed, including the cost of undoing things. 
  2. Assign a project hold-back amount (non-refundable) that covers the amount of work they’ve already paid for.
  3. Prepare an offer to cover the balance to future work.
  4. Factor the balance into a cash settlement.

Should I ask for deferments?

Yes, try to reduce any expense possible. Deferments give you room to work. Also, consider extensions. Take the 90 days if that’s what they offer, but be willing to call at 80 days and ask for more time. Remember, the AV industry is three weeks ahead of everyone else with our business disappearing. Ninety days may not cut it, but it’s a good start. 

Will I need to declare bankruptcy?

Probably not. In our industry, it’s pretty tough to declare bankruptcy because people will still lend you money. 

Bankruptcy doesn’t fix your creditor’s problems. They don’t know what to do with your assets and gear. They’ll defer as long as they can if you’ll give them any money. For them, it’s better if you’re left on their books as a sketchy asset. Just stay in touch… and write them a little check whenever you can. 

There’s a lot you need to do before we have a bankruptcy conversation. Don’t go there yet.

Want to learn more about how to respond to the COVID-19 crisis? 

Register for our new weekly webinar series: The Show Will Go On — Business Survival Series. 

I will share what I am learning in the midst of this crisis about how to respond and answer your questions about what to do next. When possible, I will bring on experts to share their ideas.

Sign up once and to register for the entire series and gain access to the replays of the previous webinars.

About Tom Stimson
Tom Stimson MBA, CTS is an authority on business and strategy for small- to medium-sized companies. He is an expert on project-based selling and a thought leader for innovative business processes.
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