Running a business is never easy. No matter how solid your business model is, there are always challenges, and at the small business level, even a thriving business is never too far away from a potential crisis. However, business owners who remain successful figure out how to turn things around when trouble presents itself. These ideas may help you save your company when a crisis occurs:

1. Don't go it alone

Talk with the professionals you depend on for unbiased counsel: your CPA, attorney, SCORE business advisor, etc. to help you decide on the options you have to solve your problems. They can add a layer of objectivity to your decision-making process and provide you with insight you may not have had beforehand. A banker familiar with your business can be a valuable resource. A business line of credit might be the solution to a short-term cash crunch, or they may suggest a commercial loan to help you consolidate high-interest business debt. Ask for help from a professional in business finances.

2. Learn from other business owners

Have conversations with others inside and outside of your industry. Read books and blogs written by real business owners who have opened up about their experiences. Consult your local chapter of SCORE or the Nevada Small Business Development Center. There is a wealth of knowledge and advice at your disposal if you take the time to seek it out.

3. Fine-tune your budget and optimize for cash flow

Before you can make any educated decision, you have to know where you stand. Conduct a thorough review of your cash flow, budget, expenses and other resources to help you make a more informed decision. Take a look at the budget and search for any adjustments that can help you save money and improve cash flow. Make a list of every ongoing expense and determine which can be eliminated or reduced. Are there services or equipment you can get rid of? Can you get a better rate from a different vendor or service provider? Can you negotiate your rate with your current provider?

On the opposite side of things, how can you bring more money in? Can improvements be made to optimize cash flow? Reassess your pricing and determine if changes can help you increase your bottom line.1 Even if a price adjustment is not in order, your strategy for collecting payment may need to be tweaked.2

4. Negotiate with creditors

If you find yourself with a mountain of business debt, it can seem insurmountable, particularly when the revenue isn't coming in as planned. Don't hesitate to contact your creditors to help you figure out your options. They want to be paid and may be willing to negotiate on a debt reduction or more feasible payment plan.

5. Reevaluate your business plan

While reassessing certain strategies can have a positive effect, the situation may call for even more drastic changes. Spend some time reevaluating your business plan as a whole. Take a hard look at which of your products and services are producing the most returns, and which may be not as productive. Can you discontinue the losers and allocate more time and resources toward the winners?

Are there ways you can serve your market that you've been ignoring or hadn't considered? Are there other markets that you haven't been serving at all, but where you could make an impact? Sometimes the money you need can come from a completely different stream from where you initially planned.  

6. Make difficult choices

No business owner wants to cut back on operations, lay off employees or pull the plug on a new project, but sometimes making these changes can make or break a company. Weigh the pros and cons of each scenario, think about how each decision might affect your business overall, and discuss your options with your advisory team. Exploring the consequences of each choice can put your situation in a new perspective and help you see which action is right for your company. Then…act. Procrastinating on a necessary step will only make the situation worse.

7. Communicate with stakeholders

It's important to be honest and open with business partners, employees and customers about these decisions to demonstrate that you're acting in the best interest of the business. Telling investors and partners you’re having financial difficulties may not be easy, but keeping people in the dark may backfire.

If you do everything in your power to recover from a crisis, you may just find that the situation isn't as dire as you had perceived it to be. It's going to take some extra work, but you know your business better than anyone else, and you have the power to put the necessary changes into effect.

1. Read this NevadaSmallBusiness.com article on pricing strategies: https://nevadasmallbusiness.com/tips-to-help-with-your-pricing-strategies/

2. This article concerns accounts receivable strategies: https://nevadasmallbusiness.com/improve-invoices-get-paid-quickly/

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank. Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC