Is your business in the red due to fewer customers and the effect of the pandemic? In times like these filing for bankruptcy may seem like the only option. However, if you’re determined that your business still has a future you can save it by doing these 5 things:
Assess Your Finances
Realistically speaking, you should conduct a viability test to see if there’s a chance you can continue running your business. This is determined by assessing your finances and seeing if it makes sense to cut back your losses or continue with operations.
To start with, you’ll need to determine how much money it’s bringing in and how it helps with payroll, rent, utilities and general upkeep. Then, you will need to check and see if you’re making enough to cover debts accumulated to get the business off the ground.
Also, do you have enough cash reserves in case of emergencies? If the answer is no to all 3, then you may want to downsize or trim the costs to keep it afloat.
Look For Opportunities to Cut Back
One of the best ways to optimize your business is to check for wasted cash flow and cut it back.
Things that do not really matter should be eliminated. You can also try to reduce operational expenses by looking to reduce energy and water consumption, for example. If rent is a major burden you may want to consider transitioning slowly into an online platform. Most businesses have success on the internet and enjoy a significantly lower monthly cost this way.
You can try outsourcing non-essentials such as admin duties and payroll. Parking validations are a nice plus, but you can do without it in the meantime. If you’re working with a lot of rented equipment, do an inventory and see which ones aren’t getting much use. For the ones that do get used, try to see if there are cheaper alternatives from other vendors.
Lastly, you can reduce worker hours and have a skeletal workforce during off-peak hours. All these things will help turn the cash flow around into something positive.
Get a Short-Term Loan If You Need More Money to Stay Open
If you really and truly believe that your business is worth keeping open and you don’t have a good cashflow, then you can consider a short-term loan and continue operations.
A short-term loan can provide a much-needed financial boost to get your company going. These short-term loans can even allow you to expand where other businesses shrink, which can give you the edge during these hard times. People may start favoring your products or services when they know you have a better selection and can provide a better service than the others.
If you’re taking this route, consider it to be a debt you must pay immediately. Don’t forget to pay at least the minimum amount on time so you can build good credit and access the loan again should you need it in the future.
Ask for Flexibility with Suppliers
It’s important that your vendors and partners know about your financial situation especially if you’re behind on payments. As with businesses, almost all of them will be able to work out an arrangement so you can stay in. It’s in their best interests as well and retaining you as a client is their top priority.
Don’t be afraid to reach out and contact suppliers by phone or instant messaging. Mention that you intend to continue and hopefully you’ll all come to an agreement.
Prioritize Your Debts
Debt can hamper your financial progress especially when you’re running a business. It may not sound doable right now but you should plan ahead and prioritize balances that can affect you the most in financial aspects. Property, payroll and income taxes are three of the biggest and most critical debts for companies, with tax being the most important.
Then, work your way to payroll and any overdue bills. The rest should go to operating expenses, suppliers and vendors, insurance, secured debts and finally, credit cards.
It’s easy to get overwhelmed when you’re put in a financial corner, but when you create a sound plan and strategy you should be able to pull through.