You started your business with plans of earning a living and being successful, but an unfortunate fact of business life is that companies suffer financial hardships. Whether those hardships are pandemic-related or linked to other urgent situations, the effect is still the same. Your finances are negatively affected and it’s up to you to lead the recovery.
Here are 5 steps you can take to help your business recover after a financial setback.
1. Find areas to cut back
As a business owner you’ll always have expenses, but there are ways to reduce your spending and save money. Negotiate rates with your suppliers or find out if you can make arrangements for a discount. If not, see if you can switch providers. Look for ways to cut back on office expenses. Can your company work remotely? Can some of your office space be rented out? Can you change utility providers?
You likely don’t want to cut back on your staff if possible, but you may have to. If you don’t want to lay staff off, try reducing hours or cutting back on perks until things turn around.
2. Follow up with clients that owe you money
During busy times it’s tempting to be more laid back with clients who owe you money. When you’ve had a financial setback it’s important to take stock of who owes you money and start collecting. Go through your invoicing system and follow up with anyone who owes you money. You might be surprised at how much could be coming your way.
If cashflow is a concern, consider charging clients a deposit to work with you. Doing so speeds up how quickly you have money coming in.
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3. DIVERSIFY YOUR INCOME
With the global pandemic prompting unprecedented financial support, small businesses have access to a variety of assistance measures. For instance, the Small Business Administration in the U.S. reported an allocation of over $730 billion in aid through programs like the Paycheck Protection Program. Businesses should explore such grants and schemes available locally to aid their recovery.
Diversifying income streams is also vital. The shift to digital has seen a 55% increase in businesses offering online services globally, according to a 2021 McKinsey report. If you possess expertise in a specific area, capitalize on this trend by providing virtual courses or workshops. Additionally, if your business is primarily offline, consider integrating online shopping or curbside pickup options to cater to changing consumer preferences.
4. REVIEW YOUR BUDGET
Revising your pre-crisis budget is crucial. A survey by the Association for Financial Professionals found that 76% of businesses reforecast their budgets monthly or quarterly post-pandemic to adapt to the new economic climate. Evaluate your current budget for any expenditures that can be deferred or eliminated. For example, non-essential employee training can be postponed, and plans for physical expansion can be delayed until financial stability is regained.
5. INCREASE YOUR MARKETING
Investing in marketing is essential for attracting customers and stimulating growth. According to HubSpot, businesses that prioritize marketing efforts can see a 13% increase in revenue. While traditional advertising remains effective, digital marketing strategies such as content marketing, social media, email newsletters, and search engine optimization offer cost-efficient alternatives. These methods not only reach a broader audience but also allow for targeted engagement, which can be highly effective even on a limited budget.
Final Thoughts
Navigating through financial setbacks is challenging yet manageable with the right strategies. By securing government aids, diversifying income sources, revising budgets to the current economic landscape, and smartly investing in marketing, your business can increase its resilience and position itself for recovery and growth. Remember, setbacks are temporary, and with adaptability and strategic planning, your business can thrive even in adversity.
