The questions now are "can you do this" and "can you make adjustments as required?" If not, you may need a guy like Ken to help you out. Considering what's at stake, it may not be a bad idea.
According to Ken's list of priorities, you should do the obvious cuts first. Then, based on conservative 30-, 60- and 90-day cash flow projections, proactively review each administrative expense and further reduce the cost; eliminate non-performers next; proceed to cuts in pay, benefits and/or hours; and keep adjusting until your projections show positive cash flow.
Assess pricing risks
Of course, ideally, you want to sell your ability to get the job done on time; your expertise; your office and field management team; and your equipment fleet that is ready and available to start work immediately. Overall, you want to show off the value-added component you bring with your proposal. This value added could make a difference.
Consequently, you may decide to keep pricing at your standard rates, knowing the result will generate less revenue. You will make a decent profit on the work, but have to cut overhead to push the profits through to the bottom line. If you have the ability to manage your expenses in this fashion, your can reach your goal knowing you can always bring price cuts into the equation.
Your ability to manage your finances is key to being able to aggressively price jobs to get work. Risk has to be assessed. Financial ability has to be reviewed. And a thorough understanding of your cost structure is a must to keep cash flow positive.
I thank Ken Hedlund for his input for this column. You can reach Ken at (800) 469-7206 or email@example.com. He can help you no matter where you do business.
Garry Bartecki is the managing member of GB Financial Services LLP and VP Finance for the Associated Equipment Distributors. He can be reached at (708) 347-9109 or firstname.lastname@example.org.