You are closer to failure than to success when starting a business. About 50% of companies fail within the first five years due to financial struggles, so finding your venture in hot waters wouldn’t be surprising. Many small businesses don’t have the financial stability to withstand difficult times, leading to closure.
If you are financially struggling, you don’t have to worry. Other entrepreneurs have already been in your shoes and escaped from the situation. However, it doesn’t mean you should stay relaxed. Your next steps will be critical to helping you survive your ordeal. Business owners can do a few things to stay afloat during tough times.
Come Up with a Game Plan
The first step is to develop a plan. You need to assess your financial situation and determine how much money you need. Once you have an idea, look for ways to generate more revenue. It could be through cost-cutting methods or finding new streams of income.
Some of the reliable cost-cutting methods you can utilize for business survival include:
- Renegotiating contracts
- Reviewing your inventory
- Eliminating unnecessary expenses
It would help if you also thought about ways to generate more revenue. It is essential to focus on growth during challenging times to ensure the survival of your business. Implementing a marketing campaign could help you reach a wider audience and attract new customers. You can also offer promotions and discounts to encourage people to do business with you.
Look for Alternative Sources of Funding
If you don’t have enough money to cover your expenses, you need to look for alternative funding sources. It would be best to exhaust all your options before resorting to loans. One of the methods you can try is crowdfunding. It allows you to raise money from a large number of people.
You can also look into grants and business loans. The government offers financial assistance to small businesses to help them survive tough times. You can check with your local chamber of commerce or Small Business Administration (SBA) office to see what programs are available.
Restructure Your Debt
If you have outstanding debt, you need to find ways to restructure it. It would be best to work with your creditors to develop a manageable repayment plan for your current situation. You can also explore consolidation options to lower your monthly payments.
Some of the things you can do to restructure your debt include:
- Asking for a forbearance
- Exploring loan modification
- Making lump-sum payments
- Filing for bankruptcy
It will be necessary to find debt reconstruction services to help you identify the best path for your plan. You’ll need reliable debt mediation specialists who already have high success rates with businesses on a similar path as yours.
Develop a Contingency Plan
It would help if you also had a contingency plan to prepare for the worst. Things might not go as planned, so you need to be ready for anything. One of the things you can do is create a cash reserve. It would help if you had enough money to cover three to six months of expenses.
You should also plan what you will do if your business needs to close temporarily. It would be best to keep your employees and customers happy during the shutdown. However, nothing beats being transparent with your employees about the situation.
Restructure Your Organization
Unfortunately, keeping your organization safe amid a financial crisis will require you to look at your top expenses. It will lead you to employee costs, which means you might have to let a few people go to stay afloat. It can be challenging to pursue, especially when your employees are high-quality talents who never had performance issues. However, it will be a necessary sacrifice for the company’s survival.
It might be time to restructure your organization. You can start by eliminating non-essential positions. It would also help if you considered outsourcing some of your operations. It would be best to work with a business consultant to help you determine the best way to restructure your company. They can assess your current situation and offer recommendations on improving things.
However, you can reach out to your retrenched employees when your business starts to recover. It might involve you accepting their return with higher pay, but it can be something they would appreciate when your business recovers. They will know that you just had to do what you did for your company’s survival.
Surviving tough times is never easy, but it’s not impossible. You need to take action and make necessary changes to ensure the survival of your business. The tips mentioned above can help you stay afloat during difficult times. However, it would be best if you didn’t wait for things to get worse before taking action. The sooner you start, the better your chances of surviving a financial crisis.