How to navigate your business through a rough patch
Top Tips For Businesses Experiencing Financial Woes
POST WRITTEN BY
Mike Ford is the Co-Founder & President Strategic Consulting Services at Pro Back Office.
Small businesses often face tough financial times. It might be a slowdown in the economy, a seasonal issue or even mismanagement. It can be hard to get back on track, but with a proactive response, you can turn things around.
Although the steps that you take will largely depend on your particular circumstances, here are some ideas that you can use to get increase your company’s financial health.
1. Identify the problem.
Start with identifying the challenges that could be impacting your business. Once you have identified the problems, then you can start to identify solutions. As a business owner, some key areas to focus on would include the following: Is your issue cash flow or profit margins? Are your overhead costs too high? Are your customers paying you in a timely manner? Are any specific areas of your business (products or service offerings) not as productive and/or profitable as the rest? Once you have identified the problems, you will know where to focus your efforts to improve the financial health of the business.
2. Pay attention to the details.
As a business owner, you need to account for every dollar that comes in and goes out. With strong financial cash forecasting, you can prioritize your spending to prevent a cash drain. While most companies create monthly cash-flow projections, you may need to adjust your cash-flow projections to weekly as you’re moving your business in the right direction. Knowing where you stand financially can really help you stay on track.
3. Focus on business development.
Businesses need to make sure that they have a pipeline of new clients for their services or products. Has anything changed with the economy that could impact your business model? Address issues that are hurting your business. Maybe you need to look for a different client base or think about moving into different regions or approaching other industries. Producing a detailed and focused business development plan will help move your efforts in the right direction.
4. Update your strategic business plan.
A review and update of your strategic plan might also be in order. All the steps above will help make this happen. Some key focus areas for the strategic plan would include the following: Take a good look at your products or services to see where you’re profitable and where you’re losing money. Determine if you can increase your rates without pushing away customers. Identify whether you are undercutting your business in your industry. Are there business assets that could be sold off or leased to improve your business health? What about your overhead: Can you eliminate or reduce monthly costs to improve your financial situation? Think about renegotiating with vendors; adjust what you can. You have one goal: survival. During a tough time, you may have to tighten your belt and do without some of the luxuries. When you are having financial troubles, it is time to take a close look at your strategic business plan.
5. Look at alternative financing options.
Another option to help your financial situation is to look at outside funding options. An internal financial executive or external CPA should be able to assist with this effort and help you assess the numerous options available to help get you through your situation.
In summary, these are some practical and basic tips that you and other business owners can use to get through financial woes.