Financial troubles are a reality that many small businesses struggle with at one point or another, whether from economic decline, unexpected expenditures, falling sales, or even crises such as COVID-19. Yet hardships do not necessarily equate with failure; if one has the right strategy and mindset, there is a real possibility for small businesses to not only survive but thrive even more in turbulent times.
Here Are Some Ways for Small Business Owners To Weather Financial Storms and Emerge Stronger
1. Honestly Assess Situation
Before you can find a solution, you need to consider how far-reaching the problem is. Put your financials under the microscope:
- Profit and loss statements
- Cash flow statements
- Current debts and liabilities
- Sales performance
Identify exactly where your business losses and losses for another reason. This honest description of your situation should be the first step towards recovery.
2. Cut Back On Non-Essential Expenses
Look for areas to cut that will not hurt core operations:
- Pause or renegotiate vendor contracts.
- Lower inventory on slow-moving products.
- Cancel subscriptions or contracts for services no longer in use.
- Shift to remote work (if applicable) to save on overhead costs.
Even small cuts across different segments can generate that extra cash needed to stabilize operations.
3. Talk with Creditors and Lenders
Trying to resolve your debts is hard enough without waiting until you default. Get in touch with your lenders at an early stage to:
- Negotiate for lower interest rates
- Request that they defer some payments or that you can restructure the loan
- Explore hardship relief programs
Most creditors want to work with a small business if they see some proactive communication and an honest effort.
4. Cash Is the King, Focus on Cash Flow, Not on Profit
Be in survival mode. Cash is the lifeblood. Concentrate on creating instant cash flow and not long-term profits:
- Discounts for early payments
- Flash sales on overstocked inventory
- Request deposits or partial payments in advance
- Send invoices promptly and follow up with those who are overdue
Cash flowing in keeps you afloat for vital expenditures and prevents you from sinking deeper into debt.
5. Get Innovative with Revenue Streams
If your current offerings aren’t doing enough, then it’s time to pivot or stretch:
- Launch new services/products on existing needs.
- Offer virtual options if you’re a brick-and-mortar enterprise.
- Bundle services with another small business.
- Explore e-commerce or local delivery.
Being adaptable means finding new paths of revenue and new customer bases.
This post was written by Trey Wright, a Chapter 11 Bankruptcy Lawyer in Jacksonville, FL! Trey is one of the founding partners of Bruner Wright, P.A., Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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