Every business goes through a tough time, and the ongoing pandemic has significantly added to the unpredictability companies typically face. In fact, as the business life cycle dictates, every business experiences periods where the demand for their goods and services falls, and they have to work towards getting operations back on track.
Typically, a business has either recovered from a difficult phase or is currently going through one. While every company goes through slumps, it undoubtedly affects small businesses more. In fact, a whopping 70% of small companies fail in their 10th year in business, with 20% failing in their first years alone.
In this case, what does a business owner do? While it may seem as if things are going towards failure, there are multiple steps you can take to ensure your business recovers from this challenging time and comes out stronger than ever.
Keep an eye on your finances
That’s how important your finances are. While you can turn a blind eye and trust your bookkeepers or accountants to handle this aspect, it’s more critical for you to take charge of your business’s finances by having a comprehensive understanding of your reports.
You need to know how your business is run and have a sharp eye on every number on your financial statements. This understanding will give you an insight into potential areas of improvement and where you can cut costs to keep your business afloat.
Experiment with something new
When things aren’t going the way you’ve planned, it’s time to switch things up. While theoretically, it’s easy to say, many businesses struggle with getting out of their comfort zones and experimenting with new areas of development.
In such times, the key is not to continue doing what you were doing previously. It would be best if you’re prepared to try new ideas and turn to other, experienced people for advice.
If, for instance, you want to try introducing a new product or service, then you should look into equipment financing. Instead of investing in an asset, equipment financing gives you access to an asset with monthly payments and down payment. Once the lease term ends, you can choose to renew it or pay off the remaining amount for the asset’s complete ownership.
Don’t compromise your quality
Of course, keeping an eye on your costs and cutting down wherever possible is crucial during business downtime. As a business owner, you need to take charge and get your employees on your side while introducing any changes. However, during this process, you need to ensure you’re not sacrificing quality.
Improving your profit margins should be a priority, but many business owners make the mistake of making drastic changes they can’t reverse. You need to cut down on costs that don’t compromise the final product or service quality.
Have cash readily available
Did you know that 82% of small businesses fail due to cash flow issues? Many businesses face problems with their cash, and having a cash reserve in case of emergencies can definitely help. The key is to always maintain a minimum cash reserve ratio from your monthly returns at all times.
There are multiple things you can always explore to maintain this cash reserve. You can liquidate stock holdings and back your business with sponsors. Equipment financing also gives you more flexibility with your cash flow since instead of paying a lump sum for an asset you’re spreading its costs.
This cash reserve undoubtedly comes in handy when tough times hit. It can make a significant difference for your survival and ensure you’re able to get past a slump in your firm’s operations.
Retain existing customers
One of the most critical aspects of your business, especially during tough times, are your existing customers. Your customer service needs to be top-notch in such a situation, and you need to make all kinds of efforts to ensure your customers are happy.
When competitors learn of your vulnerable business position, the first thing they’ll try to do is poach your customers. In this case, you need to communicate with your loyal customers, engage, and solve any issues they may be currently facing.
Think of the future
Never forget your company’s long-term perspective since it’s exactly what can help you overcome tough times. It would be best if you utilized this time to reevaluate your processes and create a plan for any future crisis.
While you can’t dictate how long a slump will last, you can control it as much as you can. Don’t assume your business is shutting down; instead, learn from the experience and understand how you can apply these learnings to any future crises.
Find a mentor
One of the best ways you can overcome difficult times is by turning to someone who’s always been through a similar situation and come out of it successfully. Never hesitate to seek help, especially from someone you admire and are experienced enough to guide you appropriately.
At the same time, avoid people who will only be pessimistic about your business’s position and have negative things to contribute. Attend seminars and networking events where you’ll meet like-minded people who can offer valuable advice.
Final Thoughts
We’re going through unprecedented times, and it’s no secret that many businesses and sectors are struggling. However, it’s vital not to lose sight of why you’re running your business in the first place.
It’s vital to prioritize what’s important and react to unforeseen circumstances wisely. Regardless of whether these tough times are occurring due to internal or external factors, you should devise a plan that’ll help you ensure your business survives tough times and, potentially, profits from them.