- Identify the cause That is the first step that you should take because if you don’t find the source of the problem, how will you be able to fix it? So, you might be facing an internal or external cause for the crisis, and that’s what you need to find out first. If it is an external reason like a recession, a natural disaster, or a pandemic, then you might be able to find help from the government. That will be crucial to keep your small business afloat, while things get better for the market. On the other hand, if the cause of the financial crisis is internal, then you need to check your books ASAP. This is one of the reasons why your small business needs a bookkeeper. This financial professional will keep a record of every income and outcome, and it will be easier for you to identify why you’re losing money.
- Cut non-essentials To keep the business running while the crisis is being resolved, you’ll need to cut all the non-essential expenses. For instance, it will be better if you focus your attention on your core products. You know the strongest points of your business, and you’ll need to take advantage of that. Avoid wasting your money on secondary products or new releases that can be a risk that your company won’t be able to survive right now. If you’re not sure about your core products, then check your inventory, and see which are your best sellers. You should focus all your attention on them, and your already existing clients. Any expense that is not crucial for your business to keep running can be thrown overboard.
- Re-do your budget Now that you know what is causing the crisis and what expenses can be reduced, it’s time for you to re-do your budget. For all this process it will be a good call to have an accountant working by your side. Take your time to sit and discuss with the financial professional all the cuts that you can do, and how the budget will change to face this situation. This will be a time to have an open mind and hear the proposals that your accountant will do. You’ll need a list of all the expenses, the cash flow, and the payments that you must do. Remember that your tight budget won’t stay like that forever, but it will be your ally to overcome this difficult situation that puts in jeopardy your small business.
- Renegotiate with vendors A very important part of any business is suppliers; without them and the good deals they offer, it would be hard to keep your company running. For overcoming a financial crisis, it will be vital that you renegotiate prices or payment dates. Don’t do crazy promises that you might not be able to do in the future, like paying higher interest in the future if they lend you material now. Be realistic and don’t make things that will make your situation worst. In case a supplier doesn’t want to renegotiate, find another supplier, and try to see if you can undo the contract that you have with them.
- Marketing Besides focusing on your core products, you should be doing strong marketing campaigns too. In times of financial crisis, you need to do whatever you can to stay top of mind for your clients. Nowadays, having a website and presence on social media might be the cherry on top to get out of a difficult financial situation. Paying for ads on Google, Instagram, or Facebook will be extremely helpful to get to the customers that you need. If doing this expense is too much, focus on the relationships with customers that you already have. Remember loyal customers are the ones that can save a business in a financial crisis. So, always try to build real and respectful relationships with your clients and make them know how much you value them. Last words We know that this might be a situation full of stress and frustration, but trying to stay with a cool head will help to make hard decisions. Take advice from other friends that run small businesses and have faced a situation like yours. Maybe they have another point of view that you haven’t considered. It might feel like the end of the world, but let us tell you that you can go out triumphantly for a financial crisis. One way to avoid this awful crisis scenario would be by using financial management systems. If you don’t know how financial management systems have changed, then let us say that in the past few years those systems have improved a lot. They can give you real-time reports and data that might be helpful to avoid financial instability. —
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