A business owner in the survival stage either does everything they can to exist in the next month or they close the business. For them, it always feels like groundhog day chasing after money. Before a business can successfully exit the survival stage, they must be able to see the light at the end of the tunnel by being highly vigilant in managing cash outflows, or the only end that comes involves closing down the business.
Once an owner fighting through the survival stage gets control over their cash, they create space for themselves to develop their management skills so that they become clear or confident about what to do when to earn higher profits with predictable cash flow through discipline reporting.
Overview
Businesses in the survival stage are doing whatever they can to exist in the next month.
Owners in this stage make all the decisions and then issue orders leading to total dependence on the owner’s talents. As a result, they are stretched thin, being involved in everything with nothing working as it should. The owner’s lack of management skills is complicated because they’re not clear nor confident about what to do when.
Too often, they are “Rolling the Dice” each week that cash inflows will be higher than cash outflows. They have maxed out their credit cards, and they have borrowed from family. What makes it worse is that they are too busy dealing with customer problems to seek out new customers needed to jumpstart cash inflows.
One of the reasons they never have cash is that they never use their P&L Statement to learn where they are losing money because they don’t know what to look at. Nor do they use leading or lagging metrics and measures to help them identify what’s working in their business and what isn’t. A look at their Balance Sheet will show A/P is greater than A/R, with more months reporting a negative than a positive cash balance.
Businesses in the survival stage employ two to five employees of average competence. They have no organizational structure, with people doing whatever they get told to do. The owners’ strategic focus is to get cash to remain alive another day.
Businesses that fall into the survival stage have owners that are failing to gain sufficient customer acceptance and operational excellence to be consistently profitable because they are never consistently profitable. They never have the increasing cash inflow needed to climb out of the financial hole they put themselves in.