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MBA2507 Q&A Wednesday: I just had to fire everyone to keep my business alive. What now?
00:18:17
Did you ever have to make the tough call to let go of your entire team just to keep your business afloat? How do you navigate the aftermath, with the weight of the business on your shoulders and a mountain of tasks ahead? This is exactly the predicament that one of our listeners, Janet, finds herself in, and today we dive deep into finding solutions.
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LinkedIn Ad Voice
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Ramp Ad Voice
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Omar Zenhom
Yay.
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Ramp Ad Voice
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Omar Zenhom
Welcome to the $100 MBA show, practical business Lessons for the Real World. I'm your host, your coach, your teacher, Omar Zenholm. And today's episode is Q and A Wednesday, where we answer a question from one of you, one of our listeners. If you got a question you want to ask, go ahead and email me over at Omar MBA Net. Today's question comes from Janet and Janet asks. I just had to fire all 11 of my team members so I could stay above ground. Now I feel so lost and so distraught. I don't know what to do now. How will I get everything done that my team members were doing? How do I move forward? I had no choice. I had to let go of my team members so that I can keep the business alive. Would love your advice, Janet. First of all, Janet, I'm really sorry to hear that you had to let go your team members. I, I know how tough this could be because I had to go through this more than once in my entrepreneur career where I had to let go many team members in order to keep the business going, in order for us to continue to be profitable, in order for us to be able to pay our bills on time and all that kind of stuff. So this is not unique. I want to let you know that, hey, as bad as it is, you're not alone. Many entrepreneurs go through this and see success on the other side. They're able to rebound. They're able to actually come back from this stronger. It's a challenging situation, but there are steps you could take to rebuild and move forward. And those steps I want to share with you today. We're going to dive into some practical strategies, things that you need to know so you can navigate this difficult time. So let's get into it let's get down to business. Letting go of one employee, two employees, but 11, that's a lot because it shakes up the team. If there's anybody left on your team in this situation, they're wondering if they're next. You as the owner, as the founder now need to figure out how you're going to fulfill the work they were doing. What do you do first, what do you do second? It's really tough to organize your thoughts when you're in that stressful situation. But don't worry, I got your back. Step one is to just assess the situation. You wanna take a step back and assess. This is probably the most painful part of today's process. The steps I'm gonna be sharing with you because you need to sit down in a quiet place with you and whoever else you're building this business with, maybe a co founder. If it's just you, then by yourself, right? And you need to be honest with yourself. You need to ask yourself what led to this situation. It's very important for you to analyze what happened so it doesn't happen again. So you don't make the same decisions that got you in this place again. Many of us, we don't do this and then we rush to take action and then we just do the same thing we did before. We don't actually change our behavior and we basically become gluttons for pain. So we want to understand the reasons that led to this decision, what caused this decision, and identify the core issues that need to be addressed. Right? This assessment will help you make informed decisions moving forward. This sitting down and getting honest involves you looking at your P and L, your financials, your spreadsheet, where you look at to see the numbers of your business. You want to review your business model. You want to analyze your, your expenses, your revenue streams and determine what went wrong and what needs to be changed to avoid a similar situation in the future. I'm going to tell you right now, in my 20 years of entrepreneurial experience, most businesses fail not because of lack of revenue, but of expenses. They overspend, they're over ambitious about how much they need to invest in the business or how much they spend on the business. Of course not making enough revenue is a problem, but that can be fixed. But if you make more revenue and then you spend just as much, if you continue to increase your expenses, you're not going anywhere. You're in the same place. So take a look at your numbers, figure out what happened. Did you lose a big client that costs you, you know, 80% of your revenue. Well, maybe you need to diversify and make sure you have more than one client that's holding up your business. Smaller clients, you know, several clients, so that you don't have one point of failure. So step one, assess the situation. Step two, you want to prioritize tasks and streamline your, your current operations. With a smaller or even non existent team, it's really crucial to prioritize the tasks that are ahead of you just so you can run the day to day of the business. Focus. You want to focus on the most critical aspects of your business that generate revenue. What are the things that you actually need to do to make money? And you want to cut out everything else that's not that. Because you can't afford to do anything else. Okay. So if you are on a skeleton crew right now and you don't have a lot of manpower, the most important thing right now for you is to sell, to make money and to fulfill your product or service. Some things are going to take a back seat, whether it's customer support, where you're going to have to communicate. We'll talk about that later, to your customers and your stakeholders. There's going to be a little bit of a delay. It's not going to be as fast as it used to be. Maybe your bigger or broader branding exercises are going to have to take a pause. Maybe the things that you're working with internally in your business, like team retreats or incentive programs, need to be cut. One of my favorite books of all time is a book called the Hard Thing About Hard Things by Ben Horowitz. One of my biggest takeaways from that book is understanding that as a CEO, as a leader, you will sometimes be wartime CEO and sometimes you'll be peacetime CEO. And your team needs to know, you need to know when it's wartime and when it's peacetime. And when it's wartime, everybody's gotta pull themselves up from the bootstraps. Everybody's gotta really focus and really have to be committed. And things are not gonna be easy and you just have to be honest about it. So when it's peacetime, no problem. Let's have some parties, let's have some retreats. But if you can't afford to pay payroll, you shouldn't be doing these parties. So back to the prioritizing of tasks. Make a list of all the tasks that your team is handling. Identify which ones are absolutely essential to keep your business. And then you want to automate any tasks that you can automate. Whether it's through Zapier or some automation in your email, an automatic reply via email, for example. That's the second level. So first level is let's just like cut anything that I don't need to do anymore to run the business. When it's peace time, we think we have to do it, but when it's war time, you're going to realize, oh, I really need to do that anymore. Then you're going to automate anything that could be automated. And then you're going to consider outsourcing any specific tasks to a freelancer by the hour. So only paying when it's done. And I recommend that these tasks should only be money making tasks. Meaning that you hire somebody to do something and it makes you money whether it's fulfilling an obligation. Let's say you're a service based business and you're delivering services. That freelancer is doing the work for that service. And therefore every time you hire them, you're actually making money because you're fulfilling service for a customer. Use project management tools like Trello or Asana or Basecamp or whatever to stay organized. Trello is free if you're on a budget and keep track of priorities. Step three. I just alluded to this a moment ago, but you want to take advantage of technology, leverage technology. There are so many things with AI, with automation tools, with software and apps that you can use to do the same thing, like customer support. There's a lot of customer support that can be done with AI now with AI bots that answer the questions for your customers that they have. Most questions that customers have can be answered. Buy an AI bot because they could just research your FAQs, your help articles, your whatever, and give the answer to them. Use AI to help you draft emails, to reply to customers, or to create email automations in your CRM. You got it. Get creative. Use technology. Because technology scales, you pay a fraction of the price and it takes care of a lot of things that maybe were manual labor before by somebody else. Step four. Communicate. Communicate, communicate. I mentioned this earlier. You want to be transparent with anybody involved that you're in a tough time. The things are a little bit different now. That includes any team members with you, any other stakeholders that are helping you fulfill your business, but also communicate this with your customers, even if you want to. You don't have to get all doom and gloom, but you can say, hey, we're making a few changes in our business and because of these changes there's going to be a little bit of a slower Response time on email support. So emails will be replied by 48 hours or something like that, instead of our typical 3 hours or 24 hours or whatever it was before. The point here is that you're just setting up expectations, letting them know, hey, I don't want to disappoint you, so I'm letting you know what's going on so you know what to expect. Of course you want to communicate this to any investors or anybody on your board. You want to make sure that everybody that is involved understands things are different so that they're not shocked. Hey, why am I getting replies? Why are we not making as much money? What's going on? Where's my bonus? Have it all hands with whoever is on your team. Still, if you're like Janet and it's just you, then this is more about communicating to your customers that things will be a little bit slower than usual, but you're doing everything you can to help them out. And don't be afraid to send a heartfelt message to whoever you're speaking to to your customers, explaining the situation, assuring them that you are committed and you're doing everything and you haven't thrown in the towel. You're in fact doubling down and you're going to make sure that they are supported along the way. Step five. I saved this one for step five because you kind of have to stop the bleeding first. And those are the first four steps. And now you need to focus on what's most important, cash flow. So step five is focus on cash flow. You want to maintain a healthy cash flow, meaning you want more money coming in to your business. Figure out in your business what are the products, what are the services that sell the most to get you the most revenue and double down on that. Focus on that. Do campaigns that are focused bringing in business from that product or service. You may want to run a campaign or a promotion to your customers for annual deals so you can get some cash flow to get you out of this tough time right now temporarily. So instead of them paying, let's say $49 a month, you can say, hey, save a bunch of money and pay $400 for the year. Now don't shoot yourself in the foot, don't over discount, but make it a deal, make it a promotion, maybe throw in some bonuses, some extra stuff, make it enticing, make it a limited time, get some cash flow. You want to boost sales for the short term so you just get out of this rut. Then you got to review your pricing strategy and ensure that you are future proofing yourself to make sure that you're making more profit. Your current revenue strategy, your current revenue streams haven't served you well because you wouldn't be in this situation. So you need to change it. You got to recognize that it isn't working. I have to increase prices, I need to increase value. I need to add more add ons. I need to offer more value so that they can, people can spend more money. You get the point. Reevaluate your pricing and your packaging with your business.
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Ramp Ad Voice
And we're back, folks. It looks like Jim from sales just got in from his client lunch and he's got receipts. His next meeting is in two minutes. The team is asking, can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pick. He's texting Ramp Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.
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On ramp, expenses are faster than ever. Just submit them with a text. Switch your business to ramp.com.
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Omar Zenhom
All right, let's move on to step six. And that's rebuilding your team strategically. All right, so we've gotten to the point we stopped the bleeding, we've communicated, we have adjusted our cash flow. We're kind of rebounding now and things are getting better and things are looking brighter. The sun is coming out, right? Let's not fall into the same mistakes that we did. That got us to the point where we had to fire our team. When that time comes. You want to start rebuilding your team strategically. You only want to hire for the most essential roles and consider part time or freelancers as you're hiring. Okay, when I say most essential, I'm going to make it so simple for you. Anybody that makes you money in the beginning, when you're rehiring everybody again, you're only hiring people that are making you money. Meaning that when you hire them, they are going to generate revenue for you immediately. This means sales roles, people that are creating content marketers. Anybody that helps you make more money is a hire. Now don't just hire anybody with pulse. You want to hire the best person possible. That's going to give you the best bang for your buck. So take your time with hiring. Don't just hire the first person. You want to hire the best person because it takes a lot of effort to train them and then having to let them go. It's a big sunk cost. Right, as you just experienced. So what we want to do here is that we want to hire strategically, make sure that we find the right person for the right role that's going to bring in cash. You can even tie in their salary or their bonus, their compensation with how much business they bring in. Number seven, seek support and mentorship. Listen, nobody succeeds alone. No one is a self made man or woman, okay? Any success I've had is because I've had mentors, I've had peers, I've had business advisors, I've had friends that provided insights for me, guidance when I needed the most, especially when I was down when I had challenging periods. So don't be afraid to ask. I almost can guarantee that if you reach out to somebody that you know and you have been close to and maybe is doing pretty good and you say, hey, I just need some advice from time to time, do you mind if I buy you a coffee and we can chat and you are vulnerable and you tell them what's going on, they will respond because they probably have gone through it too and know how you feel. Also, feel free to join a mastermind, a support group, a network. Go to a meetup, go to a, you know, a local organization for entrepreneurs. They can give you advice. Hey, I've been there. This is what I did. This is what worked. Lastly, step eight. Do not ignore this step. And that's take care of yourself. Going through a tough time in your business can take a huge toll on your emotional health, your mental health and your physical health because of the stress. Make sure you take care of yourself. Make sure you find ways to manage your stress. For me, I love basketball, I love exercise. Going to the gym, that's how I release stress because it gives me some alone time. Gives you a chance to listen to my favorite. Allows me to feel like I'm taking care of myself. Maybe for you it's yoga or meditation. Maybe it's hobbies, maybe it's, you know, painting model trains or maybe it's playing video games. Whatever it is, make sure you give yourself the chance to just diffuse because it's easy to burn out. Especially when you're dealing with so much heartache with losing team members. Go out with your friends. Reach out to somebody that you could speak to.
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Ramp Ad Voice
Reach out.
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Omar Zenhom
And if you need to, reach out to a therapist for some professional help. There you have it, guys. Let's recap those eight steps to get out of this bind. Number one, assess the situation. Get honest. How did you get into this place in the first place? Number two, prioritize the tasks that you have to do now and streamline your Operations, cut the things you don't need to do. That's not going to help you run the business. Number three, leverage technology. Okay? Number four, communicate with the stakeholders, your customers, your. Your board, co founders, remaining team members. Let them know that, hey, this is the situation. Rem the story I shared with from the Hard Thing about Hard things and Ben Horowitz Wartime CEO, peacetime CEO Step five, focus on your cash flow. This is time to pump the cash and start making more money in the places that are already making you money. Number six, rebuild your team. Strategically. Hire people that are going to make you money. Number seven, seek support and mentorship from friends from other entrepreneurs that have been there. And of course, take care of yourself. Jana, who asked today's question and everybody who's listening, I want to leave you with something personal. There was a time in my business where I really had to make some tough decisions, had to let go of some people. I had to cut some costs. It was a tough economic time and we really needed to do something to turn things around. And I had no choice but to do it. Two things I want to share with you. In hindsight, when I look back at it, yes, it was tough. Every day was a struggle. Every day was hard. I would wake up feeling like, you know, I got to keep on going. And really, you know, my advice and the advice I gave myself at the time was just take each day at a time. Just do your best today, try again tomorrow, do your best today, try again tomorrow. That's how I started my day. I'm going to try my best today. And I ended my day saying, okay, I'm going to try again tomorrow, day by day. And before you know it, you will get past this. The winter will pass and will become spring. Secondly, you might feel bad, you might even feel guilty after letting go your team members. But understand, you have a responsibility. When you started this business and became the leader of this business, the founder, your responsibility was to keep this business alive, to serve the customers. You are representing the customers. You need to make sure that they come first. So if you had to do something like let go a bunch of team members to keep the business alive, to keep your promise to your customers, you did what you had to do. It's not easy, it's not fun, it's not something that you wanted to do. It's not pleasant. But you fulfilled your responsibility. You didn't do anything wrong. You want to learn from the situation so that you don't have to do it again or go through it again. And go through this pain. Guys, if you have any questions that you want me to address here on Q and A Wednesday, make sure you email me over at omar@100mba.net and don't forget, subscribe to the show. Leave us a review. We're on every podcast app, Apple Podcast, Spotify, Overcast, Himalaya. You mentioned it. We have our podcast there for you, so hit that follow button, subscribe and get our episodes automatically. Thanks for listening to the $100 NBA show. Until next time. Take care.
- [19:52]
Ramp Ad Voice
Got a 7am meeting on a Monday? Expensing breakfast because it's in policy.
- [19:59]
Omar Zenhom
Yay.
- [20:01]
Ramp Ad Voice
Wasting all afternoon submitting an expense report for that breakfast. If your company used Ramp, you could submit expenses with just a text.
- [20:12]
Omar Zenhom
Yay.
- [20:14]
Ramp Ad Voice
Free your team from expense reports today. Switch your business to ramp. Com.