Nothing puts a stop faster to business growth than a company in poor financial standings. No matter how solid your business model is, big or small business, there is always a potential financial crisis. However, business owners who remain successful figure out how to stay away from sinking debts ahead of time. These ideas may help you save your company when a crisis occurs or prevent you from falling into one.
- Fine-tune your Cashflow Budget
Take a look at the budget and search for any adjustments that can help you save money and improve cash flow. Make a list of every ongoing expense and determine which can be eliminated or reduced. Are there services or equipment you can get rid of? Can you get a better rate from a different vendor or service provider? Can you negotiate your rate with your current provider?
A very vital point is to consider how you can bring more money in. Can improvements be made to optimize cash flow? You may have to reassess your pricing and determine if the adjustments can help you increase your bottom line. Even if a price adjustment is not in order, your strategy for collecting payment may need to be worked on.
- Cut down on Expenses
Aside from fine-tuning your cash flow and adhering strictly to it, cutting down on business expenses is one of the most effective ways to reduce company debt. Review your budget to see where you are spending money unnecessarily and to identify some costs you can potentially reduce. For example, do you need to rent an office building or can staff work remotely? How much could you save by going paperless?
To cut down on your expenses in an unstable economy like Nigeria’s, you would need to think outside of the box and get creative with where you could save money. However, remember that cutting too much and too fast can also have detrimental effects on your company’s overall performance, so seek professional advice where needed.
- Read Books and Learn from Successful Business Owners
In today’s world, most complex problems have their solutions in the pages of books. There are some very rich books that business owners trying to get out of debt can read and find step-by-step guides on how to get out of a financial crisis.
In addition to reading knowledge and solution-oriented business books, it is also helpful to speak to successful individuals inside and outside of your industry. Sometimes, vital connections are made with industry experts and these connections always come in handy, whether it’s to get information on a grant or to learn a new business trick. There is a wealth of knowledge and advice at your disposal if you take the time to seek it out.
- Negotiate with All Your Creditors
Sometimes, business debt can seem insurmountable, particularly when the revenue is not coming in as planned. Instead of feeling nervous at such moments, you must not hesitate to contact your creditors to help you figure out your options. Contacting your creditors does not affect the reputation of your company rather it portrays your company as a responsible one and whatever you negotiate with your creditors must be a realistic plan that you can meet up with. Creditors want to be paid and may be willing to negotiate a debt reduction or a more feasible payment plan, so it is important that you do not shy away from this tip.
- Review Your Business Plan
While reviewing, the possibility of identifying certain strategies that can bring about a positive effect is very high, a review may call for even more drastic changes. Take a hard look at which of your products and services are producing the most returns and the ones that may not be as productive. Can you discontinue/reduce the unproductive products/services, then allocate more time and resources toward the ones that are productive? The answer to this question must be in the affirmative if you want to get out of a debt crisis.
Are there other markets that you have not been serving at all that could make an impact? Sometimes the money you need to get out of debt can come from a completely different stream outside your original business plan.
Company debt is not a stranger to businesses, whether big or small, a business will at some point fall into some financial crisis, however, this does not call for any panic, rather a well-thought-out and calculated measure must be adopted. We advise that you stick to our tips above whenever your company may be in debt.