A business guide to sorting financial problems
At some point or another, most businesses go through financial problems. The severity of them can vary – some businesses might find they just need to cut back on some costs, whereas others may fear going under completely. As a business owner, it’s your obligation to ensure your business stays afloat no matter how many financial problems are happening. That is much easier said than done.
Whether you are a start-up or a business that’s been around for years, follow this guide to sorting financial problems.
Consider a loan
Many businesses’ financial problems don’t last forever – more often than not, the business simply needs a cash injection to tide it over for a little while. In this situation, you could consider a loan. There are lots of loan options to choose from, so depending on exactly why you require the loan, how much you want to borrow and for how long, you could opt for a small short term loan or a bigger business loan that’ll boost your growth.
Stick to a budget
Every business needs a budget, but how well do you stick to it? If you are experiencing financial problems, it’s crucial to revise your budget and then make sure you don’t budge from it. It’s a small step to overcome your business’s financial problems, but it makes a huge difference overall. Visit Fresh Books to learn better budgeting techniques.
Organize your inventory
A lot of money can be wasted through a disorganized inventory. Many businesses make the mistake of over-buying supplies and not keeping track of everything properly, resulting in wasted materials and a system that doesn’t work. To avoid this, put the effort into organizing your inventory (from scratch if you have to). You could even put a sale on with a bunch of old materials/supplies that you no longer sell, which might just give you the cash injection you need to get back on your feet.
Cut production costs
If your business is financially struggling, one way to cut back on spending is to cut production costs. First of all, reconsider your suppliers to see if other ones provide a better deal without compromising quality. On top of that, consider reducing your staff’s hours, especially if they are overworking. By cutting back on production costs in small ways, you will save your business a lot of money.
Make payment plans
Businesses fall into financial trouble for numerous reasons. Maybe you’ve overspent on stock, budgeted badly, or received far fewer orders than usual. Whatever the reason, it’s crucial to get out of the rut by making payment plans to all you owe money to. Whether you’re behind on bills or need to pay off a loan, by making payment plans you can keep up with, you’re more likely to get out of the financial difficulties. Just make sure you’re honest about what you can pay and when you can pay it!
Relocate
Did you jump the gun a little too quickly by renting out a huge office space or warehouse that you don’t need? Or maybe you did need it at the time, but it is no longer serving its purpose? To cut back on cash, relocating to a smaller and more affordable location could be the answer. Even if you can’t cut back on much space, there’s likely another workspace for a more affordable rent price if you’re willing to relocate to a less in-demand location.
Focus on retaining customers
When experiencing financial troubles, you are likely to focus on cutting costs in any way possible, but it’s important to focus on retaining customers. Otherwise, while reducing how much you spend on staff, materials, and marketing, you might end up also losing out on profit from neglecting your customers. Remember – your customers are your source of income, so make sure you deliver the same high-quality product while maintaining excellent customer service.
Outsource jobs
For many tasks, you don’t have to hire an employee or an entire department to get them done. Outsourcing is often much cheaper than this and still allows you to keep your business ticking along. Not only does outsourcing save money on staff salaries, but it also saves money on office space. Some roles you could outsource include:
- Marketing
- HR
- Accounting
- Sales
- Customer service
- IT
Cut back on staff
If a slimmer budget or an evaluation of your outgoings won’t cut it for fixing your financial problems, then you may have to consider more drastic options, such as cutting back on staff. No business owner wants to let go of hard-working employees, but if you can no longer pay their salary, then it’s better to cut back sooner rather than later. For staff you want to keep on but can no longer pay full time for, you can always offer to take them on part-time while the business gets back on its feet.
Just remember, when going through financial strains, many business owners find they must go back to doing a lot of the manual work themselves, so prepare yourself for that.
Revise your outgoings
You need to understand where your money is going before you can sort out your financial problems. You never know – you might discover that the root of your issues is a simple outgoing cost that isn’t actually that necessary! You will find it easier to cut back on areas by assessing your outgoings, saving you money without overhauling the entire business. These findings will help you create a new and more realistic budget.
Set goals
To get out of a financial struggle as a business, you must first establish the goals you want to reach. For example, you might want to cut your production costs by a certain amount, or you might want to increase your profits in the next three months. By knowing exactly what your financial goals are, you are more likely to put the work into reaching them.
No business, however big or small, is ever free from the possibility of financial troubles. By taking action early on, though, you are more likely to overcome them.
