How To Keep Your Business Running When You’re Struggling Financially
Most of the people who have a business-driven mindsets dream about the day they start their own business. Yet, this task can be harder to manage with all the key factors that go into play, especially if you are starting your own company from scratch. Every business owner knows the risks that are involved in starting and keeping their operations afloat. There are thousands of things that can go wrong every single day, from logistics, communications, to plain old inventory issues. Yet, managing finances can be the most challenging task; it’s one of the reasons that could make or break your business. However, for every problem and every rough patch, there’s always a solution.
Here are some of the best solutions to keep your business running when you’re walking in the trenches.
Credit and Network
If you’ve got an out, use it. There’s no sense in keeping your options closed. Tap into your network and up the charm. Even if it’s a solo venture, think about taking on some investors that can potentially help. Don’t oversell the value of your company. Be straight up with the numbers. Oversell your vision and your drive. There are different types of loans that are dedicated to small businesses and their owners to provide support when it’s needed. A business line of credit is a type of small business loans that provide more flexibility and peace of mind for business owners. You can use this loan to hold you over to the next quarter and start working from the ground up. Once you’ve checked the P&L, updated all your processes, and came up with a plan to inch forward, people will be willing to open their wallets under the right circumstances and pitch. If not, then the step by step move forward should be enough.
Tighten your belt
If you’ve adequately reviewed your financial statements, you can assess, from the ground up, where things are overspending. Tightening your budget and downsizing the company is crucial moves in order to stay above water. It’s either lives with the temporary discomfort of having said budget or lose your primary source of income. Because of this reality, you may need to let some people go, or you can find people that will work the same for cheaper rates. It’s imperative that, although harsh at times, you have to stick to your guns and put the business above the working contracts you have agreed on with the people on your team. It’s not personal, and you can still be there in other capacities through recommendations and referrals. But don’t overdo it. Really take some time to assess what is necessary for you and who will serve you well in the long run. It’s not just about cutting people to save money; it’s about letting go of people who offer less than they provide—or can further provide, for your business.
Follow the best financial strategy
It’s also smart to follow the golden rule of not spending all the money or not putting all of your eggs in the same basket. If you have money in your business checking account, you need to make sure that you will at least leave up to 20% of that amount. This works great in emergencies to avoid losing everything you have worked hard for. For example, before deciding on any new step, whether you are planning to hire an assistant or you want to start a new expansion project, you need to calculate the money you need and compare to the money you have. If you find that these new projects you want to pursue will require spending all the money you have, then it’s smart to not do it and wait. This golden rule will make sure that you avoid bankruptcy.
Keep business separate from your personal life
When you’re in business, there’s a general rule that you should follow, no matter what your status is: “Keep your family and your business completely separated.” Money and blood don’t mix— you’ll find yourself in some serious situations. So, keep business expenses just that, for business. Keep your personal expenses totally separate. If you’re behind on the rent, it may be tempting to dip into your funds. Don’t do that. This easily becomes a habit and serves as the downfall of so many promising business owners.
Always plan ahead
While you need to always think of finance first, you will also need to adopt an investment-driven mindset. You will find that when things are moving nicely, even if they are slow, you will be tempted to stay put. But this isn’t the best business strategy that will ensure growth and more money. When it comes to your business, it’s better to be more ambitious than content. Just like you need to leave 20% of the money you have for emergencies, you need to dedicate an amount of growth and opportunities. Make sure that you thrive while moving in a healthy financial direction. There will always be business issues, financial struggles, and areas that you will need to work on; however, when you adopt the right mindset and essential skill sets, you will be able to overcome them.
Make sure that you are always working on yourself and your business. Once you learn how to come up with a good financial plan and how to work with a budget you set for yourself, you will be able to grow without risking losing your company. It’s also important to be an optimist in the business world, yet, you need to do it logically. It may be tempting to just throw the baby out with the bathwater on issues such as finance, staffing, and other key points. But remember that a business is a self-sustaining and growing enterprise that, if done properly, will make you money. However, if things are moving at a slower pace than what you expected, change something about it. But know that even if it’s slow money, it’s sure money. So, keep your head up, be proud, and keep moving forward.