How to Keep Your Business

Most distressed-business situations are survivable. We say that on the first call and we mean it. The path is not glamorous, the work is not quick, and the changes the owner has to make are sometimes uncomfortable. But the businesses we have walked through this work in our years in the field, in the great majority of cases, came out of it intact — smaller in some cases, sharper in most, but still operating. This page is the practical playbook for what that survival actually looks like, week by week and month by month, on the floor.

It is written assuming the work elsewhere on this site — the debt-side relief, the legal-process management, the operating-condition diagnosis — is happening in parallel. The playbook below is the part the owner runs personally, inside the business, while the other work happens around it.

The four immediate moves: the first two weeks

The first two weeks of a recognised distressed situation are mostly about converting an unstructured panic into a structured operation. The four moves below are the ones that, run together, change the posture of the business almost immediately.

1. Stand up a thirteen-week cash forecast

The single most important document in distressed-business work. Thirteen columns — one per week — with rows for opening cash, expected receipts (by major customer or category), expected disbursements (by major category and creditor), and projected closing cash. Updated every Monday morning.

The forecast does three things at once. It tells the owner, in concrete terms, what the cash picture actually looks like rather than what it feels like. It surfaces the weeks where projected cash goes negative, far enough in advance to take action. And it converts the conversations with creditors, advisors, and counsel from impressionistic to specific.

Most owners we sit with have never built one. The first version takes about three hours. Subsequent updates take twenty minutes a week. The information is on the bank statements and in the receivables aging; it just has to be put in one place.

2. Stop the discretionary cash drain immediately

While the longer-term operating work is being scoped, there is a short list of cash leaks that can be closed inside the first week without affecting the operation of the business.

• Cancel every recurring software subscription that is not actively in use today. The SaaS audit usually finds three to seven of these in any small business.
• Reduce or cancel discretionary advertising spend that is not measurable. If the marketing dollar cannot be tied to a measurable revenue effect, it stops until the cash position permits it.
• Pause discretionary capital spending. Equipment upgrades, vehicle purchases, office improvements, optional inventory pre-orders — all on hold pending the recovery work.
• Move the company credit card to a single owner or controller for approval on every transaction over a small threshold. Spend discipline is faster than spend analysis.
• Adjust owner draw down to the level the business can demonstrably support, which during the active work is often substantially below the prior baseline.

None of these moves rebuilds the business on its own. Together, in the first two weeks, they typically free three to ten percent of operating cash that was previously evaporating without being noticed.

3. Open communication with the major creditors before they open it with you

The single biggest miscalibration we see in distressed-business work is the owner’s instinct to go quiet. The opposite move — calling the major creditors, in advance of any default, to communicate the situation and the work being undertaken — is, almost without exception, the right one.

The conversation does not require a finished plan. It requires honesty (“we are working on the situation, here is the advisor we have engaged, here is roughly the timeline we are operating on”), professionalism (no panic, no bluster), and a small concrete deliverable (a follow-up date, a thirteen-week forecast in two weeks, a status update at month one). Most creditors will accept this kind of communication and become substantially more workable as a result. The creditors who become difficult are the ones who feel ignored, not the ones who feel informed.

Where the situation is delicate — aggressive funders, MCA stack — we run these conversations on behalf of clients rather than letting them happen unmanaged. But even there, the principle is the same: communicate before the situation forces you to.

4. Bring the team in, partially, with a defined story

If there is anyone on payroll besides the owner, they have noticed. Cash pressure leaves visible footprints — delayed payments to vendors, hesitations on hiring decisions, tighter weeks on payroll — and the team picks up on them long before management names them.

The conversation with the team does not have to disclose everything. It needs to disclose enough. “We are running tighter than we have run in the past, we have engaged advisors to work through it, we expect to come out of this in two or three quarters, and here is what we need from each of you in the meantime.” That conversation, run honestly, almost always produces better behaviour from the team than the alternative of letting rumour and cash anxiety circulate without management framing.

The middle months: weeks four through twenty

The first two weeks are about structure. The middle months are about discipline. The work is repetitive, mostly unglamorous, and the most tempting moment for the owner to drift is somewhere around week six, when the initial adrenaline has burned off and the steady grind has not yet produced visible results. This is the stretch where the businesses that come back differ from the businesses that do not.

The Monday review

Twenty minutes every Monday morning, on a fixed time, on a fixed agenda. Bank balance. Receivables aging. Update the thirteen-week forecast. Note any items off track. Note any incoming items requiring response inside the next week.

The act of doing it on a fixed cadence, in a defined window, is more important than the analysis. Owners who Monday-review their distressed business for sixteen weeks running, almost without exception, find that the situation has stabilised by week twelve. Owners who skip Mondays as the pressure eases, almost without exception, find themselves back in the same posture six months later.

The pricing review

Most distressed businesses have not adjusted pricing in two to four years. The pricing work, run honestly, often produces the largest single source of operating relief in the engagement.

The exercise: for each major product line or service offering, calculate the fully loaded cost (direct labour, direct materials, allocable overhead) per unit or per engagement. Compare it to the price actually charged. Calculate the gross margin in dollars and percent. Sort the products and services by gross margin. Identify the lines that are below the threshold the business needs in order to be sustainable.

For each of those lines, three options exist: raise the price, reduce the cost, or retire the line. There is rarely a fourth. Raising prices on long-standing customers feels uncomfortable; in the great majority of cases we have seen, prepared, professional communication of a price adjustment produces almost no customer loss and meaningful margin recovery. Customers who depart over a price increase were usually marginal customers anyway.

The cost line-by-line review

Run through every recurring cost in the business, line by line, with the question: is this cost necessary, at the current level, for the business to operate? Most of these reviews find three to six places where the answer is no.

• Insurance — reshop annually, audit the workers’ compensation experience modification carefully for classification errors.
• Merchant processing — the single most consistently overcharged line in small business; the contract is almost always worth re-bidding.
• Telecom and internet — usually negotiable on renewal.
• SaaS and software — the audit is described above; many of these are dead weight.
• Freight and logistics — renegotiate with the incumbent or get bids from alternatives.
• Utility — in deregulated states, supplier contracts are negotiable; demand charges for small manufacturers can sometimes be restructured.
• Waste and uniform services — the evergreen-contract category; certified-mail termination plus competitive bid almost always reduces the line.

None of these is glamorous. Each one is a phone call, a quote request, a contract review. The aggregate effect is significant.

The customer concentration look

Most distressed businesses, on examination, have either a concentration problem (too much revenue from one or two customers) or a profitability concentration problem (most of the revenue from customers whose work is below the margin threshold). The data, when laid out clearly, is uncomfortable but useful.

The work is not to fire customers in a panic. It is to know which customers and jobs are profitable and which are subsidised, and to direct sales effort and pricing posture accordingly. Some of the unprofitable lines may turn out to be acceptable strategic anchors that the rest of the business profits from. Many will turn out to be sentimental relationships that have been quietly draining the business for years and that the owner had not let himself examine.

The conversations that have to happen

Three conversations carry disproportionate weight during the middle months. None of them are easy. All of them, in our experience, produce better outcomes than the alternative of avoidance.

The conversation with the spouse. If a spouse is involved in the household, the spouse needs to be informed of the cash and operating picture honestly. Not because the spouse needs to manage the work; because the household decisions — lifestyle, draws, household cash — are part of the picture, and a spouse operating without information will make those decisions differently than a spouse with information. We have, more than once, seen the simple act of an honest evening conversation produce a dramatic shift in the household’s adaptability.

The conversation with the senior team. Everyone in management needs enough of the picture to make the operating decisions you are about to ask of them — the price increase, the staffing change, the discontinued product line, the tighter cash discipline. The information is bounded; the trust the conversation produces is not.

The conversation with the accountant. If the accountant has been engaged only for tax preparation, scope changes are needed. Weekly or biweekly cash and receivables review. The thirteen-week forecast review. A monthly close on a faster cadence. The accountant’s involvement is often the cheapest professional service the business can buy in this period, and the most underused.

What separates the businesses that come back

We have, by now, seen a substantial sample. The businesses that come back — meaning, twelve and twenty-four months out, are still operating, have a clean credit picture, and are not back in our office — share a recognisable set of patterns.

• The owner ran the Monday review for the full duration, not just the early intense weeks.
• The pricing got adjusted, even when it was uncomfortable.
• The unprofitable lines got retired or restructured.
• The discretionary cash leaks that were stopped in the first two weeks did not creep back in once the pressure eased.
• The accountant’s scope was expanded, and the expansion held.
• The owner draw was reset to a sustainable level and not snapped back to the prior baseline at the first sign of relief.
• The relationship with the major customers was strengthened by honesty, not damaged by avoidance.
• Some version of a cash reserve started accumulating once the immediate work was done, and the reserve discipline persisted.

The businesses that did not come back, in our sample, almost always reverted on three or four of the items above by month nine or ten. The relief from the debt-side work eased the pressure; the operating-side discipline relaxed; the cash drains crept back; the unprofitable lines stayed; the owner draw snapped back; and the conditions that had produced the original distress reassembled themselves over the following four quarters.

The discipline question is the question.

The honest framing

Keeping the business through this is not heroic. It is almost the opposite. It is the patient, repetitive, unglamorous work of looking at the numbers every Monday morning, having the uncomfortable conversations as they come up, and refusing to let the relief produced by the debt-side work be spent on the same patterns that produced the distress in the first place. The owner who does that work survives. The owner who waits for the work to feel inspirational does not. We are saying it plainly because we have watched both versions of it many times, and the difference between them is not talent and is not luck.

If we can help, we will. Some of this work is what we do; some of it is what the owner does, with us in the room reminding him that he is doing it. Both halves matter.