All businesses travel on a rocky road at some point or another. From economic downturns and recessions to supplier shortages and negative PR; there are a variety of things which could affect your revenue.
Unfortunately, many businesses are unable to wait it out until things improve. With limited cash flow and fewer resources, small businesses are often unable to recover from operational disruptions. However, there are steps you can take to keep your business your business afloat when times get tough…
For business owners, their company is something they have cherished from the very start. Nurtured into existence and built from scratch; an enterprise becomes much more than a job or a career. Due to this, owner-operators tend to be heavily emotionally invested in what goes on. This can make relatively minor issues seem like major problems.
Before you start to panic, take a step back and put things into perspective. Often, the consequences of an issue aren’t as dire as you first assume. Once you’ve got a clearer idea of how serious the issue is, you can formulate an effective plan to deal with it.
Without money coming in, your business is going to struggle to stay operational. Providing your expenditure is covered, most businesses can survive for quite some time without generating any actual profit. Providing you can secure enough revenue to pay essential bills, your business can ride out the tough times and wait for the boom to strike.
With pre-prepared contingency plans in place, you already have a strategy you can put into action. Contingency planning is an essential part of business management because things will inevitably go wrong from time to time. Providing you have a workable and realistic plan for every eventuality, you’ll be able to keep your business functioning in times of crisis.
Businesses have a variety of financial obligations, such as commercial rental, loan repayments, staff wages and supplier’s invoices. If you start to default on these, it can be difficult to get back on track. Maintaining cash flow is one way of paying your essential bills but this can never be 100% guaranteed.
With the right protection and insurance policies, however, you can protect your business in times of difficulty. From product liability insurance to protect you from legal action by consumers to business loan protection to ensure your repayments are always made on time; contact financial advisers and lenders to access more information and get the policies you need. When you have financial protection in place, you’re better able to withstand economic downturns and unforeseen crises.
If your turnover dips, one way to offset the loss is to reduce your expenditure. If you’re already operating a lean business, it might be difficult to find viable money-saving options. However, there are always ways to minimize your outgoings.
Discuss your position with your current suppliers and shop around to see what other firms can offer you. When an industry-wide turnover occurs, other businesses will be affected too. This means they may be more willing to lower their prices, as they’ll be keen to maintain their own cash flow.
Small businesses can be sitting on a surprising number of assets, so assess your current setup and determine whether anything is underused. Industrial machinery and commercial equipment can be valuable, even when it’s second-hand. While it won’t provide on-going revenue, it could give you access to a short-term solution to temporary cash-flow issues.
Modifying the structure of your business isn’t something to do lightly but it can be an effective way to minimize the impact of reduced turnover and profits. By scaling back your operations, diversifying into other markets and streamlining your staff, you could potentially reduce your costs and increase your revenue.
While no-one wants to lay off staff or scale down production, it could be a savvy way to ride out the tough times and keep your business afloat.
Protecting Your Business
When you experience a reduction in sales or a decrease in turnover, it’s time to take action. With accurate forecasts, however, you can get an idea of how the next quarter will play out and pre-empt potential pitfalls. By keeping an eye on the future, you can prevent damage to your business, maintain revenue and cash-flow, and ensure your enterprise continues to thrive.
