The past year and a half have not been easy on businesses, but the smallest ones have been hit hardest. Small and mid-sized enterprises do not have the resources that giant corporations do, and they don’t have the same wherewithal to bail themselves out of financial crisis or trouble.
But there are some financial strategies that small business owners can employ to keep their heads above water even for a moment and hopefully, save their company from permanent closure. Here are some of them:
Get feedback from customers and consumers
If you find that your revenue has been decreasing slowly but surely in the past few months, what you can do is get feedback from your customers or clients. Doing some surveys is free and won’t take too much of your team members’ time.
Here are some questions you can your customers about your products or services:
- Ask them what the business is doing right
- Ask them what the business is doing wrong, or what they might want to see done in a different or improved way
Once you find out your customers’ and clients’ sentiment about your services or products, manage and review your collected information and check which parts of your processes can be improved so that you might see your revenue increased in the immediate future. Another thing you can check is your pricing and that of your competitors. If your services or products are elastic enough that making some price cuts might yield an increase in sales, or if you can get away with increasing some prices without losing your existing customers, don’t be afraid to make some changes.
Consult with a specialist
Another immediate action that small business owners can take when faced with the threat of closure is consulting with an experienced bankruptcy attorney. Consulting with a lawyer does not make liquidation or closure inevitable; it’s just a smart financial move to make since these attorneys can help owners find debt relief, and know all of their options. They can also help protect you from overly-aggressive collectors and negotiate debt settlements without you having to worry about the expenses associated with debt relief agencies and consolidation loans.
Examine all expenditures
Now is the time to look at receipts and all your outgoing expenditures and check which ones you can cut out. Here are some questions you need to ask about all your expenses:
- Is this expense truly essential to your business’s operations?
- Does this purchase generate enough money to pay for itself?
If the answers to these questions are a resounding no, then it’s time to cut them out of the budget. One example is your office or space rental. Imagine a world in which your business can operate from your home and do so efficiently. If you find that your business can survive without a rented space or office, make everyone work from home and amp up your delivery service. Decide based on your current needs, not your future ones—that is the nature of being in survival mode. When you’re trying to keep your head above water, growing, developing, and investing are not the priority.
Check your personal budget as an owner
Because small businesses do not have the luxury of being completely separate from the owners’ personal finances, you have to ensure that you are also keeping a close eye on your budget and personal spending, and not just on your business spending. Now is also a good time to cut back on non-essentials and to leave within or even below your means.
Cautiously reduce overhead
Reduce overhead if you must, but not too much that you negatively affect the quality of your customer service, products, and services. The last thing you need to do is to let the quality of your services suffer because you might lose the remaining clients or customers you have. We live in a time when brands need to be authentic as trust among consumers continues to wane, and consumers can see when brands are cutting corners to increase their profit, and this may trigger a toxic cycle that causes your brand to lose trust and the good reputation it has built over the years. If you must reduce overhead, make sure it doesn’t affect the experience of your clients and customers.
The pandemic has been hard on small businesses, but it’s never too late to turn the tide. Watch your next steps carefully, consult with experts, and believe that it’s not over until it’s over.