Whether you’ve just started out or your business is going through some difficult times, you’re probably wondering how to keep your small company on the track financially.
In fact, financial problems are the most common reason why businesses fail. Data shows that 82% of small businesses fail because of cash flow problems. Other top reasons why small businesses fail include:
- Starting with too little money (79%)
- Lack of a well-detailed business plan (78%)
- Poor pricing decisions (77%)
- Overly optimistic expectations (73%)
- Failing to seek help from others (70%)
Now, as you may imagine, any problem that your business may deal with will eventually lead to cash flow issues. And, unfortunately, good management of finances makes the difference between a company that keeps on climbing the ladder of success and one that falls at the very first hurdle.
Your business is already struggling financially. What can you do to get it back on the track?
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Understand the pain points
The very first thing you should do when experiencing cash flow problems is to determine what is causing them.
There are literally so many things that can affect your business’s financial health, from your marketing strategy, your management style, your employees, or even a poorly-designed business plan. So, with so many factors that can affect your cash flow, how could you know what needs to be changed if you’re not sure what’s causing the problems?
Thus, first, spend some time identifying the pain points in your business that are making you lose money.
Are your employees demotivated? Does your marketing strategy fail to engage customers? Or maybe you fail to manage your team the right way? Whatever the problem is, you must find it and work towards solving it.
Invest in better financing tools
Maybe your business’s financial problems have nothing to do with a bigger underlying issue. Maybe you are just not effectively managing your finances.
If you keep losing track of your expenses and revenue, it might be a sign that you need to invest in an accountant or professional accounting software so that you can keep an eye on all your money and manage them the smart way.
Accountants don’t just help you understand what you owe come tax season. They can also identify your business’s financial needs and better money management strategies.
Negotiate with your vendors
Paying your vendors is probably the most significant monthly expense you have for your business. So, if you’re struggling financially, you may want to lower the numbers in this direction.
Start by reaching out to your vendors and suppliers and see if there’s any wiggle room with your payment period. Also, if you have a long-standing relationship with your vendors, you may be able to renegotiate what you are paying them, at least for a short period until you get your business back on the track.
Try something new with your business
You don’t have to go full-rebranding mode on to reinvent your business. Yet, you can try something that you didn’t consider until now because it may be what your business is missing or may put your business back on the map of businesses in your area.
If not enough paying customers is your problem, you may want to reach out to your target audience better to understand their needs and expectations from your business. Maybe there’s a new product you can launch, or maybe a new service you didn’t offer before, such as home delivery. Either way, by talking to your target audience on how to improve your business and implementing those ideas, you can reinvent your company and attract more customers.
Get a business loan
Do you have big plans for your small business that could save it? But most likely these plans require money that right now doesn’t exist in your bank account. So, what can you do? Getting a business loan can help.
Research various possible financing solutions and learn what requirements each lender has. You can find information like this on websites, such as Smarter Loans, that gather the best loans and financial services from various lenders. Next, you can compare interest rates, see an approximate amount of how much you can get, and even read reviews about lenders.
Figure out how much money you need and how the investment will help your business get back on the right track and look for the best financing option.
Invest in a better marketing strategy
You probably don’t think that further investing in your business when it is struggling financially is a good call. However, think about it: paying customers are the core foundation of any successful business. So, if you want your small company to find success again, you need to focus on attracting paying customers.
What if your product really is incredible and would sell like hotcakes, but your marketing strategy fails to engage people and bring you customers?
If you think that your business does everything right, but customers still don’t show up at your door or your website, you should rethink your marketing strategy.
Take a look at your marketing data and use the analytics to identify where your strategy fails to engage or convert. Identify where your target audience is and what type of content they engage with the best and optimize your content to attract them to your business.
Invest in your employees
You know what they say, “happy employees make happy customers”. Yet, according to a 2017 survey conducted by Gallup poll, 85% of employees are not happy at work. Could your employees not be productive enough as a result of not being happy about their jobs?
Investing in employees is one of the smartest decisions a small business can make. Don’t believe us? Find out that 70% of employees quit their job because they see no future advancement in their current position. So, by investing in your team, not only that you help your employees gain new skills and knowledge, but you also make them feel important.