The Financial crisis of 2008 has resulted in many people losing their jobs and businesses. According to The Business Journals about 170,000 small businesses were lost in the U.S within the first two years of the recession. Keeping your business financially stable can be a hard for business owners especially considering that funding from banks are pretty tough to get. At this point the decisions being made are critical and business owners would have to make some tough calls which unfortunately could mean downsizing the company, relocation or completely shutting your business down. And although the economy has recovered it is clear that small businesses need to do more to be prepared for economic downturns before they happen. Here are some tips you can take to assist you in making the right calls when things are not going in your favor.
1.) Tracking your finances
Tracking your businesses financial well being should be a daily chore as a manager. There are systems you can put in place that monitors your business that can provide weekly and monthly statements too. When analyzing what is cost effective for your business you must analyze everything that contributes to profitability like how much your business make per product/service you sell and how much you earn from customers and other things. This is used so you can focus on what product or service generates the most revenue for your business so you can focus on just that alone.
2.) Avoid bank financing
When money is tight getting funding from a bank or other funding institutions may sound like a way out of your financial troubles but in reality you’re just delaying the inevitable. The cost of maintaining your inventory, the equipment you may use and pay other expenses just adds up and accepting funding from banks which are hard to come by any way would just sink you in debt and damage your credit history. Instead look for alternative methods to keep cash flowing in your business like crowd funding systems and peer to peer lending. You could also look into invoice factoring where your business’s sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount.
3.) Don’t rush to expand
Everybody wants their business to succeed otherwise they wouldn’t start one to begin with but if you want your business to grow it’s better that you don’t rush into things. This means buying the latest equipment for your business if the existing one you have works just fine or finding a new location for your business even if you can afford to do it. The aim here is to allow your business’s growth to be sustainable so that your business is known for what it can do. Building a reputation takes time and you can’t buy a good reputation.
4.) Cut costs
Look at anything in your business that is taking space. Merchandise with low turn outs are costing you time, space and money because the cost and labor that is being spent to keep could have been used to push your more profitable goods. Cost of waiting for these goods to be bought is a huge drain on your finances.
5.) Train your staff
It’s always a good to have someone who knows the ins and outs of your business. If you can teach one or more people how to do the different tasks that goes into running your organization. You wouldn’t want your business to slow down just because one key person is out. When you have people who could take their place productivity remains constant, customers are satisfied and things continue to remain operating smoothly in your business.
6.) Pricing your goods/services
Pricing goods is not a trick you could pick up easily because over/under pricing your goods can cost you your customers. What you need to do is find that costs that lie in the middle. Goods that are excessively price does not always equate to lost of customers because some people believe they’re getting a good value for the goods they have and the prestige that comes with owning a high value asset. Sometimes there’s other factors that could be included that makes people want to spend more for a product/service they could get for less like the business environment or how they were treated at said establishment so whatever you could improve on in your business to let the customer know what you’re offering is worth the price could to your advantage.
No business is invulnerable and though these tips could help you get by there is no guarantee that your business can make it completely through what ever crisis exist on the horizon. Still you should get your hopes down because every action you take could give your business a fighting chance so seize any opportunity you have so that your business doesn’t lose out completely.