Wilbert is the Founder and CEO of Think Act Prosper, an independently published global media and education company.
Business never runs smoothly, and at some point in any growing company, money becomes a pain point. How you react to the issues is your choice, and my own proven way of dealing with money issues is to use E.R.I.C.
When my first company ended its second year of operations, a major falling-out occurred between me and the majority of the fellow shareholders. Long story short, I had to buy all of them out, save for one, to keep the company afloat.
On top of that, they stopped their clients from paying their dues to the company. To make matters worse, I had just invested a large sum of money into our first business conference, due to start in five months’ time. I spent around $150,000 inviting some of the best speakers from the United States to speak at this event, which in hindsight was an extremely bold risk, considering it was my first attempt to organize such an event.
The buyout left me with an insufficient marketing budget to promote the event, resulting in a lack of sales. I was now burdened with three threatening issues at the same time: a buyout of shareholders, a severe lack of cash flow and the expenses of the business conference, which were soon due. The total amount that I had to cough up added up to almost $300,000.
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Part of me felt like I was backed against a wall, but without a plan B, I had to face my problems head on. When deciding how to get the company out of this deficit quickly and efficiently, I turned to the principles of E.R.I.C.
To start, get clear on where you are wasting time and eliminate low income-producing activity. One hour that some people use to make $10 is the same hour that other people use to make $10,000. Always aim high. Never be fearful; you aren’t going to solve a big debt problem with a low income anyway. Instead, go all out and provide superior service.
I sold things that I didn’t need or wasn’t using anymore. Remember, cash lying around not being used is a waste. It’s the same thing if your cash is tied up on items. I used that money to quickly invest in myself and my brand.
I changed my existing loan that had a shorter tenure and higher interest rate to longer tenure and lower interest rate. The idea is to reduce the “cash burn rate.” This allowed me to buy myself enough time so that I could come up with a plan and execute strategies to solve the $300,000 hole.
Another important aspect to this step is to reduce unnecessary spending. Start measuring everything, including tracking your expenses, and stop wasting money on things that aren’t contributing to helping pay off the debt. My personal goal became to beat my previous week’s spending, and after I started tracking I was able to reduce my weekly expenditures by 50%, mostly by paying attention and refusing to waste money on frivolities.
Following that, make note of all your activities that are generating income and ask yourself if it’s possible to build on them and/or scale them up. Are you able to get more clients? Can you provide more services to your clients to create more revenue? Can you deliver a better service and therefore charge more?
These were some of the questions that I pondered frequently, centered around increasing the quality and quantity of my income-generating activities and what I could provide for clients. Many businesses have found that having existing customers that make repeat or additional purchases is more valuable than attracting new customers, and brainstorming ways to provide more value to my existing client base allowed me to increase my income.
Now it’s time to ask yourself the big questions: What are you passionate about and good at, but haven’t started monetizing? I realized that I was not utilizing my network. I started providing customized services to clients from all over the world, becoming a broker of everything. I put deals together for clients, made introductions for them and helped bring them to places where they potentially wanted to start their own businesses. If I couldn’t provide a solution myself, I’d either outsource it to someone, or learn from a mentor, then present the solution to my client at a premium.
Asking the big questions about your own possibilities can stimulate your ability to think out of the box to come up with new ways of generating income from your passions. If you can identify your skill set and your passions, these can be leveraged to become another source of income while you get to do what you’re passionate about. The possibilities are endless.
In hindsight, while I didn’t like the stress that happened to me at that point of time, I appreciate it now, considering that it made me better and stronger. I managed to get out of debt within six months, and the first business turned out to be a success.
As the saying goes, diamonds are formed under pressure, and I now know that I needed to experience those hardships in order to learn new skills — like applying the E.R.I.C. framework — to take my life and work to the next level. Since then, I’ve always reminded myself that in every crisis lies an opportunity to rise and shine.