As an entrepreneur you found out that your sales are going down because of the current economic slowdown. If you run the business the way you've been running it, you'll end up with a negative cashflow after 3 months. What would you do?

This is a challenging question. Economic downturn will hurt everyone. In economic downturn, we need to survive and look for all available options and so choosing a single option may not be appropriate. 

Considering economic slow-down due to fall in oil prices,  one company at Saudi Arabia imposed ten percent salary cut recently for all employees- this is reality.

C. Introduce a new product / service and focus on marketing and selling it hoping to make enough revenues from it

Plus, try to invest money on something that only needs capital, Real estate or stocks (IPOs).  

thanks for inviting , I choose  from answers the answer is :C. Introduce a new product / service and focus on marketing and selling it hoping to make enough revenues from it .

Thanks

As for me , I will not touch my staff under any kind of circumstances , but I can re-arrange them and re-arrange my organization joints and\\or department joints .

Any ways : My answer is C) Introduce a new product / service and focus on marketing and selling it hoping to make enough revenues from it

Introduce a new product / service and focus on marketing and selling it hoping to make enough revenues from it;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;''''''''',,,

it depends on your assessment of the cycle, i.e. when the downturn will end?

Soon >> option B seems a good one. 

NOT >> you have to combine B and C.

Thanks for inviting , my  answer is :C.

May I add a new option?

I would actually look at my budgets and understand what's going on. Because even in an economic slow down, you can create a profit margin that won't be affected, but you have to understand what's happening with budgets and focus on reallocating funds or cutting funding to areas that do not require so much. 

The reason why I would not choose any of the offered options is because you cannot fire a percentage of your employees if they are essential to your business. Now if you look at performance and see that some of your employees are slacking and you're just paying them for nothing, then yes...let them go. That way you can free up some of the funding and put it back towards your corporate capital. I would not put those monies back into anything else. I would also look at streamlining operations (and I use this word a lot because people do not understand the importance of this). 

If you're forcing me to choose an option from what you have noted above, I would choose C, but without spending. Find a way to market without having to increase your expenses.

In reality, the recent decline in oil prices has led to Kuwait announced% layoff extra number of expats in all sectors in private and governmental  organizations, Moreover, decline in fuel prices, reduced revenues in the oil and gas industry and the negative sentiment has somehow dampened the recruitment activity in the whole country. This doesn’t mean massive termination of employees, there are many other alternatives.

For me  I  will not lay off anyone but choose to  cut the salaries of all employees by-%

In fact, if I have my own company I  should looking to retain talent in critical positions because in demand these days are professionals with a good background and qualifications .

Measuring Cash Flow Prepare cash flow projections for next year, next quarter and, if you're on shaky ground, next week. An accurate cash flow projection can alert you to trouble well before it strikes.

Understand that cash flow plans are not glimpses into the future. They're educated guesses that balance a number of factors, including your customers' payment histories, your own thoroughness at identifying upcoming expenditures, and your vendors' patience. Watch out for assuming without justification that receivables will continue coming in at the same rate they have recently, that payables can be extended as far as they have in the past, that you have included expenses such as capital improvements, loan interest and principal payments, and that you have accounted for seasonal sales fluctuations.

Start your cash flow projection by adding cash on hand at the beginning of the period with other cash to be received from various sources. In the process, you will wind up gathering information from salespeople, service representatives, collections, credit workers and your finance department. In all cases, you'll be asking the same question: How much cash in the form of customer payments, interest earnings, service fees, partial collections of bad debts, and other sources are we going to get in, and when?

The second part of making accurate cash flow projections is detailed knowledge of amounts and dates of upcoming cash outlays. That means not only knowing when each penny will be spent, but on what. Have a line item on your projection for every significant outlay, including rent, inventory (when purchased for cash), salaries and wages, sales and other taxes withheld or payable, benefits paid, equipment purchased for cash, professional fees, utilities, office supplies, debt payments, advertising, vehicle and equipment maintenance and fuel, and cash dividends.

"As difficult as it is for a business owner to prepare projections, it's one of the most important things one can do," says accountant Steve Mayer. "Projections rank next to business plans and mission statements among things a business must do to plan for the future."

Improving Receivables If you got paid for sales the instant you made them, you would never have a cash flow problem. Unfortunately, that doesn't happen, but you can still improve your cash flow by managing your receivables. The basic idea is to improve the speed with which you turn materials and supplies into products, inventory into receivables, and receivables into cash. Here are specific techniques for doing this:

• Offer discounts to customers who pay their bills rapidly.
• Ask customers to make deposit payments at the time orders are taken.
• Require credit checks on all new noncash customers.
• Get rid of old, outdated inventory for whatever you can get.
• Issue invoices promptly and follow up immediately if payments are slow in coming.
• Track accounts receivable to identify and avoid slow-paying customers. Instituting a policy of cash on delivery (c.o.d.) is an alternative to refusing to do business with slow-paying customers.

Managing Payables Top-line sales growth can conceal a lot of problems-sometimes too well. When you are managing a growing company, you have to watch expenses carefully. Don't be lulled into complacency by simply expanding sales. Any time and any place you see expenses growing faster than sales, examine costs carefully to find places to cut or control them. Here are some more tips for using cash wisely:

• Take full advantage of creditor payment terms. If a payment is due in 30 days, don't pay it in 15 days.

• Use electronic funds transfer to make payments on the last day they are due. You will remain current with suppliers while retaining use of your funds as long as possible.

• Communicate with your suppliers so they know your financial situation. If you ever need to delay a payment, you'll need their trust and understanding.

• Carefully consider vendors' offers of discounts for earlier payments. These can amount to expensive loans to your suppliers, or they may provide you with a change to reduce overall costs. The devil is in the details.

• Don't always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a bargain-basement price.

Surviving Shortfalls Sooner or later, you will foresee or find yourself in a situation where you lack the cash to pay your bills. This doesn't mean you're a failure as a businessperson-you're a normal entrepreneur who can't perfectly predict the future. And there are normal, everyday business practices that can help you manage the shortfall.

The key to managing cash shortfalls is to become aware of the problem as early and as accurately as possible. Banks are wary of borrowers who have to have money today. They'd much prefer lending to you before you need it, preferably months before. When the reason you are caught short is that you failed to plan, a banker is not going to be very interested in helping you out.

If you assume from the beginning that you will someday be short on cash, you can arrange for a line of credit at your bank. This allows you to borrow money up to a preset limit any time you need it. Since it's far easier to borrow when you don't need it, arranging a credit line before you are short is vital.

If bankers won't help, turn next to your suppliers. These people are more interested in keeping you going than a banker, and they probably know more about your business. You can often get extended terms from suppliers that amount to a hefty, low-cost loan just by asking. That's especially true if you've been a good customer in the past and kept them informed about your financial situation.

Consider using factors. These are financial service businesses that can pay you today for receivables you may not otherwise be able to collect on for weeks or months. You'll receive as much as 15 percent less than you would otherwise, since factors demand a discount, but you'll eliminate the hassle of collecting and be able to fund current operations without borrowing.

Ask your best customers to accelerate payments. Explain the situation and, if necessary, offer a discount of a percentage point or two off the bill. You should also go after your worst customers-those whose invoices are more than 90 days past due. Offer them a steeper discount if they pay today.

You may be able to raise cash by selling and leasing back assets such as machinery, equipment, computers, phone systems and even office furniture. Leasing companies may be willing to perform the transactions. It's not cheap, however, and you could lose your assets if you miss lease payments.

Choose the bills you'll pay carefully. Don't just pay the smallest ones and let the rest slide. Make payroll first-unpaid employees will soon be ex-employees. Pay crucial suppliers next. Ask the rest if you can skip a payment or make a partial payment.