It happens. Businesses get into trouble. You find yourself in a cash crunch. You can’t pay your bills or worse, you struggle to make payroll. It is a tough spot to be in.
Business is fun , yes but what happens when your business begins to fail, what happens when you no longer make profit and you are dipping into your savings?
What do you do to keep your business floating and well? How do you?
1. Cut costs.
To stay in business, you will likely have to reduce your costs. First, eliminate all unnecessary spending. The Christmas outing or the company holiday party need to go.
Can you reduce what you pay for travel costs or utilities? The landlord may be willing to reduce rent, at least for a time, if the alternative is empty space because you are out of business.
2. Owners should take control of their businesses.
If owners don’t have a hand in day-to-day operations, they have no control over whether businesses will succeed. Don’t stop at pointing out what should be done and how, also clearly state and emphasize that there will be consequences when standard operating procedures and processes aren’t followed. Also, you are free to be stern with your employees.
3. Prioritize your payables.
You owe more than your available cash. Therefore, you must prioritize what to pay. We suggest prioritizing in the following order:
First, pay any obligations that will shut your business down if you don’t pay them. For example, if you don’t pay your employees, they will likely leave to find work with employers who can pay them.
If this leaves you unable to deliver your product or service, you’ll be out of business. Paying employees is typically a top priority. Also, think about those vendors who supply needed materials.
4. Remember that the marketplace is a war zone.
It’s necessary to develop a warrior mentality instead of shrinking away from the competition. In order to be successful and remain that way, you have to continually focus on the market, react to it, and fight for what you believe should be yours. If you don’t, your competition will win the war and you do not want that.
5. Identify Problems
Narrow the focus of the problems the business is experiencing. For example, if a competitor enters your market and offers a better product or lower prices, one of the main issues of your business’s failure is an inability to compete. In this instance, put your focus on matching prices or promoting quality of service over price.
If your main problem is a slowdown in business, evaluate the effectiveness of your sales force and the nature of your marketing and advertising approach. Identifying key areas of business problems can help you focus your turnaround efforts.