While running your own company might be a dream come true, the unfortunate reality is that not everything will go according to plan. Sales might fall below expectations, expenses might rise, or the economy itself might veer off in unexpected directions. If any of that happens, you’ll need to make sure you have the necessary infrastructure in place to bounce back – in other words, your business needs a backup plan. Let’s consider three potential plans you can turn to in the event of financial hardship.
1. Get Financial Help
Whether your profits are down or the expenses are stacking up, financial struggles mean that you’ll need to find quick and dependable sources of cash. While getting a loan from a bank is the traditional approach, it’s not the only way. You can consider avenues like asset finance to quickly get the funds you need to maintain your critical operations. Asset finance often offers flexible rates and easier qualification than traditional bank loans, allowing you to receive your money in as little as a day.
2. Start Saving
You might also consider creating a large savings account during times when business is good, so you’ll have extra cash to fall back on when times get tougher. If you don’t currently have a solid cash reserve, it’s essential that you start reserving profits for it as soon as possible. This might force you to forgo expansion or purchasing new equipment for a short time, but protecting your business’s future is worth the delay.
3. Reduce Your Spending
If your venture is failing to turn a profit or your bills are outpacing your sales, you’ll need to reduce spending in as many areas as you can. Be prepared to take an honest look at your budget and ask yourself: are all these expenses necessary? Is there any way for you to cut them down while maintaining your regular operations?
There are a few tried-and-true ways to get your spending under control. You might need to pivot the way you run your business. For example, you may find that you’ll need to emphasize online shopping over retail experiences. You might also cut products that aren’t selling well or change your production model by switching to a different supplier or manufacturer. Are there any cheaper ways to create your products while still meeting demand?
Of course, the quickest way to slash costs is to reduce your staff and let go of any employees whose work is expendable. However, this should be avoided when possible. Firing your employees can reduce staff morale and erode trust in your business, potentially making your company less productive than it would have been had you kept the employee.
4. Have a Network
You should never go it alone in your business – not when things are good, and especially not when your cash flow isn’t meeting expectations. Having a network to fall back on during financial setbacks can be central to helping you bounce back. Make sure that you have a network of business associates and friends who can provide you with support, guidance, and resources should your business face an economic hurdle. If you’re not sure where to get started, look for a small business group mentoring program in your area.
Poor finances might feel like an insurmountable obstacle for your business. However, if you keep a level head and fall back on a proven backup plan, you can set yourself up for greater success in the future.