- Open A Line Of Credit In Advance
Starting and running a small business can be quite a challenge for many business owners. Cash flow is one of the biggest hurdles the business owner must overcome for it to stay afloat. As a business owner, you need to put up measures to ensure the business has easy access to cash – to cushion it during periods of crisis. Although most people will simply get a bank loan to help finance the business, you need to be sure of how much credit you can access. For this reason, experts recommend first opening a line of credit even before thinking of a bank loan. It is only in doing so that you can be sure to survive short-term cash problems in the near future.
While convenient, you shouldn’t rely entirely on bank loans for financing and to keep your business afloat. It would be advisable to look for other ways to fund business processes. This can be as simple as borrowing money from family or friends, liquidating stock holdings, or tapping into your savings. Putting aside some money to cushion the business during tough financial times might be your ticket to wading out of the storm.
- Identify Possible Financial Issues
In addition to opening an extra line of credit to cushion the business from tough economic times, you also need to ensure you aren’t making small (but silly) business mistakes. This is as simple as cross-checking every financial decision, especially expenses, to ensure there are no loopholes. Find out how to apply for a government crisis loan online. Even the slightest financial mistakes can quickly escalate to significant financial issues and losses. That said, it would be advisable to monitor and go through your quarterly expenses line by line. Although time-consuming, this is your best bet for identifying and isolating current and potential problem areas. Don’t focus entirely on one-time expenses but instead on anything that might be draining the accounts. Office supplies are an excellent example of things to watch out for. With the fluctuating market prices, it is easy for prices to go up without you noticing. Comparing market/product prices with different suppliers can however help you find a more affordable supplier.
- Get Everyone Involved (Especially Employees)
Monitoring, identifying, and isolating possible financial problem issues gives you an upper hand in mitigating and managing risks. Financial experts, however, also recommend getting everyone involved to ensure the business runs smoothly. In other words, get your employees engaged and on board with most of the company’s financial decisions. They need to understand the need to keep customers happy and satisfied without sacrificing quality, despite the tough times.
Although you might be tempted to cut costs during the production, you do not want the quality of your products to suffer. The only way to keep your expenditure low without affecting quality is to never make drastic changes to key components, ingredients, or products. If you own a bakery, for example, you do not want to go for cheap filling ingredients or dough but rather cut costs in other areas. This way, the quality of your pastries will remain top-notch but at a reduced production cost. Keep your customers satisfied and happy with the product, and your profit margins will grow.
- Review and Re-examine Your Business Plan
Most small and startup businesses take time before they can start to realize profits. Making it through the initial stage is usually the most challenging part. It is thus advisable to look into your business’ performance and financial position from time to time objectively. Is the business making profits? If not, what could be the reasons for this? Do you have non-business assets, and are they generating the recommended returns on investment? The key at this point is to survive the tough times, a reason you might want to make tough decisions. If some of the non-business assets are underperforming, you could as well liquidate them. As long as business operations remain unaffected, it is better to have cash than non-performing assets.
- Be Proactive
There’s no better way to run and manage a business than by approaching everything proactively. Ignoring possible production or financial issues with the business is a recipe for disaster. Instead, make an effort to identify these problems, isolate them, and deal with them head-on. Only by resolving all financial issues early can your business start moving in the right direction. You don’t necessarily have to identify and resolve these issues alone – appoint a team of ‘directors’ to help. The ‘directors’ should be individuals with experience in the specific field and people you know and respect. They also do not need to be on the payroll but people with your business’s best interests at heart. That said, you need to be careful and wise when choosing your board of directors.