(Picture: Carl J Cox in Nashville)
Strategy 4 Saturday Blog (<4 minute read)
Musical Chairs in Nashville
Remember the game musical chairs? You would circle around as the music played, but there were always fewer chairs than players. When the music stopped, someone was left without a seat. That unlucky person who did not time the music right, sometimes they fell on the ground in frustration. Meanwhile, the winners waited for the next song to survive the next round. During my recent visit to my favorite entertainment city Nashville, I was reminded how this old game feels a lot like today’s business environment.
The Economy
We are seeing slowing sales in many industries. The overall economy begins to weaken small and large businesses — with rising unemployment and declining confidence. Surprisingly, many business owners are still holding on to the belief that things will get better soon. With the Fed decreasing interest rates by 50 basis points for the first time since COVID-19, this is a key indicator that the multi-year combined increase of interest rates, inflation, and elimination of the COVID economic stimulus savings has finally corrected the economy. However, the reality is what worked a few years ago (economic stimulus, PPP, etc.) will probably not return to save you. Waiting for things to improve without adapting can lead to being left without support and this is NOT a musical chairs game.
(Picture: Upcoming $4M Strategies Podcast)
Operating Cash
In times like these, having enough operating cash is critical. We recommend at least two months’ worth to protect your business during a downturn. Ideally, six months of operating cash is better, and the most resilient companies aim for a year’s worth. That way, when a recession hits, your business can not only survive but also seize opportunities—like hiring top talent that becomes available.
But cash alone isn’t enough. You also need to keep an eye on the leading indicators in your business, such as your sales pipeline and customer behavior. Are customers not buying as they used to? If so, it’s time to dig deeper into why and make decisions based on the data—not on hope.
Don’t Wait!
If you wait too long to act, tough decisions become unavoidable. Businesses that fail to adapt might face borrowing money under unfavorable conditions or, worse, laying off valued employees. And while layoffs are one of the hardest decisions to make, they sometimes become necessary if you’ve got six people but only five chairs to fill.
If you find yourself unsure about the right move, our team at 40 Strategy can help guide you in building the right strategy, while 40 Accounting ensures you’ve got the financial insights to make informed choices. The goal is to make these tough decisions only once, not over and over again.
Wishing you a strong strategy from Music City, Nashville—have a great weekend!
(Picture: $4M Strategies™ logo)
Podcast Schedule:
The $4M Strategies™ theme for the week is Effective Senior Leadership.
- Mon, 9/23 – Carl J Cox – Special topic: Making Tough Business Decisions
- Tues, 9/24 – Divya Parekh
- Weds, 9/25 – Greg Selkoe
- Thurs, 9/26 –Angus Nelson
- Fri, 9/27 – Dane Groeneveld – Strategic Planning
- Tues, 9/24 – Anatoliy Labinskiy
- Thurs, 9/26 – Sheldon Bernard (Re-release)
