Content mainly intended for those in the Oil & Gas and related sectors.
Your work has been decreased, rates are down but the business cost structure (even after some adjustments) is still heavy. You have been holding your payables as much as possible to keep payroll and equipment payments up to date (can’t have a business without people and equipment). There’s a good chance one of those payables you are behind on is CRA and the bank lines are getting maxed. You are trying to determine what your options are and they range from doubling down and investing more blood, sweat and tears into your business or doubling over and simply packing it in. Sound familiar?
This is the situation many businesses are faced with in the oil and gas sector, including all those that supply and transport supplies and services. Gov’t leaders say this is a challenging time for the market. A challenge is finding parking at the mall on a Saturday afternoon – the situation for many small businesses right now isn’t a challenge, it’s a matter of economic life or death. Here are some ways we see our clients navigating through the downturn:
STRESS TEST: Use the past 3-6 months income as predictor for the next 12-18 and build a quick and simple cash flow around these figures.
SELL YOURSELF: Ask for work and ask a lot of people often and offer solutions and get creative. If you are too scared or proud to ask for business then you will get what you ask for…nothing.
COMMUNICATE: Frank & open discussion with staff often yields surprising results in terms of ideas, support, and a change of attitude. We’ve seen staff volunteer for work share, unpaid sabbaticals, and contact friends and family who can get more work.
KNOW YOURSELF: What is your risk tolerance and how much is worth taking. What are the trade offs you have to make. Think and talk about these with people you trust.
RE-NEGOTIATE ALL COSTS: you don’t know until you ask and many suppliers will opt to take less then nothing at all.
RE-FINANCE: bring debt in line with new cash flow. Refinancing right now might have a higher interest rate but you can bring your pmts down substantially and often negotiate early payout discounts.
Remember nothing lasts forever – the good or the bad. Make decisions, take action and see yourself only stronger when the market comes back.