Whether you’re a budding entrepreneur or the mastermind behind a renowned franchise, all companies run the risk of failure, whether it’s due to the economic downturn or a shift in the market.
From successfully managing cash flow to applying for an emergency loan, we’ve rounded up 7 ways you can save your business from a financial crisis.
1. Take an objective look at your business model
First things first: step back and take an objective look at your business to identify the underlying issues at play.
A simple SWOT analysis will help to underline your company’s strengths, weaknesses, opportunities and threats. By pinpointing your business’ strengths and weaknesses, you can then begin to rethink your brand, the services you provide and the daily running of the company.
Next, assess the opportunities and threats faced by your business. This might mean tapping into what competitors are doing, identifying shifts in the market or paying closer attention to what’s trending in your target market.
With this information, you can then plan your recovery strategy.
2. Create a SMART plan for your business
Once you have identified the problems stunting your business’ growth, the next step is creating a SMART strategy.
This means creating goals which are specific, measurable, attainable, relevant and time-based.
3. Cut costs
Just as you would cut back on costs when suffering from personal debt, eliminating unnecessary business expenses will help free up money that can be used elsewhere.
This could mean closing an unprofitable part of the business or negotiating with the landlord for cheaper rent until your company gets back on its feet.
If labour costs are your greatest expense, you may need to replace higher-cost personnel with contracted or outsourced employees.
4. Be honest with employees and investors
Instead of staying schtum about the problems your business is facing, speak honestly with those in business with you.
Giving employees insight into the company’s struggles will enable them to address internal issues. With a motivated and communicative team behind you, you’re far more likely to get things back on track.
It’s also important to explain your situation to creditors. If you’re candid with them, you may be able to negotiate a payment deal that will hopefully ease some of the pressure your business is facing.
5. Manage cash flow
Striking a balance between inflow and outflow is essential to keeping your business afloat.
Creating a cash flow forecast is a great way to understand how much money you have coming in and out.
Other ways in which you can manage cash flow effectively is paying bills on time, chasing late payments and taking deposit payments in advance.
6. Apply for an emergency cash loan
If money is a little tight, it may be worth applying for an emergency cash loan.
Companies such as Sunshine Loans offer same-day cash which is a great way to get on top of outstanding bills without being tied down to long-term repayments.
For further guidance on creating an emergency savings account, make sure to check out top tips.
7. Create an emergency fund
To safeguard your business from any unforeseen expenses or changes in the economy, it’s crucial to create an emergency fund.
- Prioritise yourself and staff members by putting aside enough to cover payroll and employee benefits.
- Set up an automatic transfer such that your emergency fund grows while you focus on the business at hand.
- Take full advantage of unexpected windfalls by investing more money than usual into your emergency fund. It’s advised that you have at least three months’ worth of operating expenses at the ready in case of future emergencies.
- Choose a high-interest account so that you can slowly reap the benefits.
For further advice on taking out a loan and managing a budget for the first time, make sure to check out our blog.