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:
Fine-tune your budget and optimize for cash flow
The obvious first step to saving a business in crisis is to 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?
Next, make a list of possible expenses that may not occur, but which could set you back if they did. Plan ahead for how you will deal with them. This means not only having a disaster plan in place, but also accounting for potential problems, however minor.
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
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.
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.
Talk to your banker
A banker familiar with your business can be a good resource. A business line of credit might be the solution to a short-term cash crunch, or your banker may suggest a commercial loan to help you consolidate high-interest business debt. Ask for help from a professional in business finances.
Avoid mixing business and personal finances
Mixing business and personal finances is a recipe for hardship. If your personal finances become drained for some reason, it can be tempting to think about tapping your business for some aid, even if you believe it to be a temporary advance. The reality is that this is very dangerous for your business and can send it into crisis mode.
Look for other forms of help on the personal side of things. Consider a personal loan if that's an option, and if you've yet to encounter the issue, prevent it from happening by not only setting up a personal savings account, but also contributing to it whenever possible. Depending on the source of your financial woes, always explore alternatives to borrowing from your business.
Learn from other business owners
You're not the first business owner to find yourself in a crisis, and you certainly won't be the last. Learn from those who came before you. 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.
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/solutions-to-make-it-easy-for-clients-to-pay-you-on-time/
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, a division of ZB, N.A. Member FDIC