How does a struggling business not just survive but actually grow during a difficult time? It all comes down to the decisions you make right now, today. Here are six steps you can take now to come out of an economic downturn stronger than when you entered it.
The pandemic and the associated economic turmoil have made this a challenging time for everyone, including small businesses. So how could a struggling business make it through and even grow during difficult times like these?
It all comes down to the decisions you make right now, today. The steps you take, or fail to take, could mean the difference between closing up shop and cornering a piece of your market.
Trimming the Fat
Trimming the fat is more than just eliminating expenses. It’s about looking at your company’s cash flows and seeing where improvements can be made. Haphazardly slashing costs can have a negative impact on your business down the road. For example, eliminating your marketing and advertising budget could reduce your sales weeks from now. It’s always less expensive to maintain your current customer base than to try to build a new one.
Staying on top of invoicing is more important than ever in tough times. The ZenBusiness Money app can help you easily send custom invoices, accept credit card and bank transfer payments, and manage your clients from an easy-to-use dashboard.
Right-Sizing Your Business
In a tight economy, you need to be flexible enough to meet the changing needs of your customers. This also means re-evaluating who your true customers are. Negotiating with your suppliers to provide just-in-time deliveries or to extend payment terms to alleviate cash flow timing issues is a great place to start for companies that no longer have operating lines of credit to draw from.
Downsizing Your Business
No one likes to lay off employees. Sometimes there’s just not a way to get around it. Offering reduced hours to your employees or making per diem arrangements could be a solution that will work for both of you in the short-term. If you have to let your staff go, temporary placement agencies are a great resource to provide help on an “as needed” basis.
Marketing Your Business
If your industry is shrinking, now is the time to take a second look at your position in the market place. Are you poised to capture customers from other businesses that have closed? Reach out to other business owners in the community for opportunities to exchange referrals or offer joint discounts.
Planning For Your Business’s Future
You may not be planning to leave your business to Uncle Sam, but if you do not include tax implications in your succession plan, you could be doing just that.
Without the proper succession planning, barely 30% of small businesses remain profitable into the second generation and less than 15% survive the third generation. Failure to develop any plan can be even more disastrous.
Whether you’re turning over the reins to the next generation, buying a business, selling a business, or merging with a competitor, it can all be very overwhelming. Fortunately, there are experts who’ve assisted many business owners, large and small, in making that transition.
Know Your Resources
Your accountants, tax specialists, and financial advisors are a critical piece of your business team. Use their industry experience, knowledge of the local economies, and skills in business management and financial turnaround to take your business to the next level and do more than just survive the downturn.
Talk to your CPA about services that go beyond traditional accounting. Need a cost efficiency analysis to help you decide the best use of your money? Have you heard about the significant tax savings available to you through cost segregation? Could you benefit from renegotiating your business’s financing with your bank? Are you considering merging or acquiring another business? Good public accounting firms are more than just the place that does your taxes; they can be your directory of resources. Your accountant should have an extensive referral network that can provide you with the right services from the right vendor at the right time.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
Carley F. Mealey, CPA