Lessons for Crisis
9. Respect your creditors.
Don’t complain about your bank and their demands or about your suppliers. They lent you the money you needed—all they want is to be paid back. They don’t want your home, your building, your assets—they want cash. And don’t hide from your suppliers or lie to them. Be transparent and show them changes that you are making to get yourself out of trouble. If additional unforeseen problems arise—and they always do—let all of your creditors know. Don’t brush the problems under the rug and risk having your creditors find out on their own. Understand that, at this point, everyone is staring at your company. The truth always comes to the surface. Be transparent and tell them how you will address and remedy the issue.
Task: Establish a weekly communication schedule with your creditors. It is possible that you may be talking with them daily because of your lending needs (borrowing base calculations, etc.). However, if you have your cash-flow projections updated weekly to measure budget vs. actual, then you should have a meeting or call with the lender to update them at this point. Concurrently, you can have a running list of action items that you are working on to turn the business around, and you should update them weekly on these items as well. Most importantly, don’t avoid them. Bankers don’t like surprises; they can handle trouble. If they know of the problem, they will try to manage around that risk. Work with them.