Many businesses big and small hit a rough patch at some point, but its how you plan for and react to these rough areas that can make or break your business!
Here are some areas that can cause rough patches and ways to stay above water as you navigate these issues.
Many small companies struggle with cashflow, meaning they allow customers to take too long to pay them. This can be the cause of a rough patch or can make it difficult to get out of a rough patch without proper planning. Poor cash flow can seriously disrupt your business and long-term survival so it is ideal to get on top of these issues before you hit a rough spot.
Present clear, strong, consistent credit terms to your customers, letting them know the terms and how they are enforced. A written agreement from the moment you start working together is ideal. Schedule regular emails, invoices, or phone calls with your customers to remind them to pay you any money owed. It is also a good idea to reevaluate your credit control process. For example, does your business wait until a payment is 30 days late to begin reissuing invoices or making a phone call? Change your practices to help you avoid and get out of a rough patch in terms of poor cash flow by sending reminders before the payment due date. Pick up the phone and call them if their payment is late rather than relying on another invoice or email. A phone call is harder to ignore and is much more personal, and can get your customers moving towards payment, especially since they may be able to provide a credit card payment over the phone.
Fixing these problems may give you the cash you need to keep going for the time being.
2. Adjust Your Business Forecast
If your business is starting to struggle or already experiencing difficulties, it may be due to your business forecast. You may project improvement based on how hard you and your employees are working. As great as hard work is, it is often not enough! Treat your business plan like a living document and draw up realistic forecasts based on the next 3, 6, or 12 month, using your actual sales. A forecast should be based on what your business is capable of so you can plan accordingly.
3. Reassure Your Employees
If your business has hit a rough spot, now is not the time when you want to hiring and training new people to fill vacancies. Do not be tempted though to keep your employees in the dark about business struggles, they will undoubtedly pick up on issues and may feel uneasy or ready to jump ship. Meet with key people first such as managers and directors to have a meeting on how to fix your business issues. Have a plan when you go into this meeting but allow this to be an open-minded and flexible discussion with your leadership on how to fix issues at hand.
It is also important to meet with the rest of the employees to let them know there are issues and how management plans to fix them. Ask for employee input and provide them with relevant parts of your business plan. They will feel more assured if they know that management is aware of problems and seriously addressing them.
4. Assure Your Customers
Rumors of business issues could easily swirl within your customer base. If key customers are becoming nervous and looking for new vendors, it does not hurt to personally talk with these clients and assure them that steps are being taken to address the business issues. Be reassuring but do not lie about the state of the business.
5. Cut Unnecessary Costs
If you are having trouble staying afloat, now is seriously the time to cut the bloat in your budget. Cutting expenses is a great way to buy you time while you fix other areas of the business. Small fixes like putting a freeze on office functions or employee expense accounts are helpful. You can also consider bigger changes like switching office spaces to a more affordable location. Consult with your accountant for areas of potential improvement.