As a business owner, nothing feels gut-wrenching than realizing that your business is dwindling on cash flow. Bills are not getting paid. Employees are beginning to doubt their chances of working in the coming month. You, the employer, is sitting on the fence on what’s next to do.
First, stay calm and continue reading.
This is not a consolation, but you’re not alone; millions of business owners have been or are currently in a similar situation as yours.
Regardless of the level of financial damage, the most crucial step is to find a lasting solution to the current issue on ground and save your business from the looming collapse. We’ve put together 10 things to do when your business is running out of money.
1. Face The Situation
The worst thing you can do is handle the current issue like a pinch of salt. You don’t want to ignore the fact that there’s a problem.
Once revenue starts to go down the drain, you still have workable options; however, the options begin to reduce as the situation worsens. To face the situation, you need to understand the depth of the damage.
Review your balance sheet. Check your cash flow statement. Cut down your short-term and long-term expenses to increase the money coming into your business.
Proper utilization of this information can go a long way in fixing the cash flow issue.
2. Cut Cost
When your business revenue dwindles and you want to break even, cut cost. Cutting costs can be done in many ways, from implementing a pay cut to reducing/cancelling subscriptions. Look for costs that your business can survive without and cut them off temporarily.
3. Raise Rates
When was the last time you revisited your rate sheet? If you can’t recall, then raise your rate sheet according to the value provided and current market rates. To reduce the negative effects of raising rates on customers, try to inform them beforehand.
Be careful not to overcharge so your new price doesn’t scare them away. Because if your price is too high, customers will switch to an affordable competitor.
Here’s a quick hint; Increase your prices gradually and steadily, rather than a sudden jump.
4. Consider Changing The Payment Schedule
Because a business is running out of funds does not mean that they’re folding up. The problem could be with the payment schedule. In my decades of experience, I’ve seen established brands almost running out of funds just because money is leaving at a faster pace than it’s coming in. Review your payment schedule and reevaluate the conditions you give your vendors and clients.
For example, instead of receiving your payment from clients and vendors after 90 days of product or service delivery (net 90), reevaluate the payment term to between 15-30 days. Reducing the turnaround from the product delivery to payment can help strike a balance between your business’s incoming and outgoing cash flow, providing more opportunities to balance your business account effectively.
5. Focus On The Small Sells
The biggest mistake many business owners make when running low on money is concentrating on the big deals. They only focus on large sales. Focusing on big win is flawed because it’s do or die. It’s like going down or moving up drastically instead of working your way up.
When cutting costs, focus on the small and concurrent sales to boost revenue and limit burn rate. These changes can bring in more revenue. If you’re going to rely on the big sells or that big customer, you’ll be putting your business in a terrible position.
6. Partner With A Growth Firm
You might consider seeking help from a growth firm to assist with your business funding and guidance to financial recovery.
They offer their financial support to businesses struggling to break even on their cash flow.
Commitment is key: before opting for help in this situation, remember that growth firms will also prioritize businesses that show a significant level of commitment.
Kindly check this link and fill out the application to see if you qualify for partnering with us.
7. Use Personal Funds
Are you completely confident and positive about your business? Does your entire life depend on it? You may want to think of investing your personal funds to overcome the short downturn.
Warning: make sure you have a financial plan in place before risking your personal funds. Keep in mind that money won’t fix bad business models or inappropriate financial planning.
Therefore, before you risk your personal savings on your business, make sure all plans to revive your business with the fund are already in place.
8. Sell It
Avoid selling out of desperation. However, if you’re left with no choice, then consider selling your business to a trustworthy firm.
The process of selling a business might take time, so keep in mind that you might need to maintain your business for months.
9. Run A Promotional Campaign
Promotion is a critical part of a marketing strategy that can help boost business sales and revenue. Running a promotional campaign attracts more attention to your business and raises brand awareness. They also increase visibility among competitors.
Make sure you run a promotional campaign that aligns with your customer’s needs. Another great idea is to create a discount or coupon on a particular product or service before a particular holiday session and create awareness of other products or services through this offer. Overall, design a compelling and irresistible offer.
10. Apply for a loan
A recent research found that over 29% of small businesses fail because of insufficient operational funds. Applying for a business loan can be the only workable solution at the moment.
However, before you apply for a loan, make sure you’ve carefully clarified the terms and conditions of the lender and make sure the loan comes with an attractive rate.