Tough Actions To Save Your Failing Business: Image source
Countless people have chased the dream of being their own boss. The picture we paint of being self-employed is often appealing, however, it’s rarely close to reality. A large percentage of businesses will simply fail. Only those with the work ethic and business savvy will stand a chance of continuing trading for long enough to grow to a size where some of the dream starts to come true. How do you give yourself the best chance of success when your business is struggling? Here are the tough actions to save your failing business.
Dramatically cut costs
While many employees have an image of bosses that includes unlimited bank accounts and wasteful habits, the truth is the opposite in successful companies. A successful boss will be even more aware of the company’s expenditure, as they need to ensure it can continue paying the wage bill and all the crucial expenses needed to continue trading. What is the bare minimum you can survive on personally?
When considering what costs to cut, always look at non-human costs first. These may include looking for better deals for utilities and materials, as well as speaking to your landlord about a reduction in your rent. While this might sound unlikely, many landlords are prepared to make temporary concessions rather than lose your business altogether. It can also involve cutting out unprofitable services and potentially trimming your employees. It isn’t easy, but the alternative of liquidating a company is worse. You want to avoid this if you can.
Talk to your employees and let them know the company is going through a time of austerity. Sometimes employees will prefer to take a small reduction each rather than lose a colleague.
Speak to creditors and plan your cash flow
There are certain bills that you must prioritise to remain trading. These can include utilities and wages. Suppliers of essential materials must also be close to the top of the list. After you’ve structured your priorities in a way that ensures you can continue trading, your next priority should be to address the bills that can incur large penalties, such as taxes.
Part of planning when you can pay all of your expenses will include looking at the cash you will be receiving. Creditors are far more likely to accept not being paid if you can give them a clear date of when they will receive payment and tell them what you’re doing to ensure it doesn’t continue longer than it has to.
It can be tempting when you can’t pay someone to just ignore them. However, communication is crucial. The vast majority of people will be willing to work with you if they can see you’re approaching the problem in the right way. The same applies if the creditor is your bank. Most banks will only call in a debt when they think there is little to no hope of the business surviving. Keeping them in the loop in a proactive way is far more likely to put them at ease and increase your chances of success.
All of the above tips are essentially triage for a business going through a difficult patch. Only you can assess how fundamental specific problems within your business are, and therefore make the necessary adjustments.