s.png)
Business in trouble 2022
Inflation, energy costs, wars and the rising fear of poverty all add up to uncertainty around tomorrow’s course of business. We can hardly find any indications from the macroeconomic environment that leave room for optimism.
What can we do about it? What can we do to keep our business going and profitably? For sure we cannot change our environment. So, we have to adapt in order to succeed. You will read a compressed roadmap of 6 steps that you should really consider going through, in keeping your business alive and flourishing.
What to do if your business is in trouble?
⦁ Budget
You have to know your company’s numbers. Run them many times over if necessary. Large corporations dedicate resources into planning and analysis, in many cases these departments are called financial planning and analysis. You must go through all aspects of your business. What is your profit margin, how much are your operating expenses and what is your company’s profitability? What is the cash cycle and what is the net working capital? What are your pricing points? What are your options for building a competitive advantage or a blue ocean strategy? What are your main cash outflow items? Are there any alternatives for purchasing that would lead to cost cutting and saving cash?
In building competitive advantage and focusing on specific markets, your company might have to invest in specific equipment, knowledge. Moreover your company might have to undertake a series of significant investments in marketing, advertising and sales. You have to make different scenarios, depiciting different alternative paths in building such a solid business. Running the business in a stagflation might mean lower margins, something that you should prepared for.
⦁ Create growth opportunities
Focus on your customers. This is the best time to be by their side, along their journey. Learn their problems and challenges and offer products and services that are vital and provide valuable solutions for their companies’ growth. Also, this is an excellent opportunity to choose which customer you are going to support on the long run. As Mr Grant Cardone said the value of the business is determined by the value of its clientele. Focus on the customers that capture the value of your offerings, spend your money and time in building tailor made offerings that help in bringing their business to a new level.
⦁ Focus on customer relationships
Once you have decided on the customer to invest in, you may also decide on your sales terms as well. What are the pricing, delivery and credit terms? Firstly you must check what you can afford to offer. Knowing your numbers will prove to be crucial for making this calculation. Secondly, you must choose on which customers to invest in. As Mr Waldinger stated, good relationships keep us happier and healthier. Now that you are choosing the people you will work with, why don’t you select the ones you are happy to work with?
The process of deciding on credit terms involves two steps. The first one is deciding on the sales from now on. How will the customer pay for these sales? The second one is negotiating the collections of previous debt. Do you see future with this customer? Is this a business relationship that seems like a dead end and you with to close it the soonest possible?
⦁ Eliminate every unnecessary expense
Is it possible to ensure the company’s profitability by decreasing costs? That depends on which costs you choose to cut and where do you invest the money saved. If this process is done properly every cent saved from an unnecessary expense is a cent invested in the long run of the company.
Go through your expenses, again and again. Make a list of those that are vital for delivering your offerings to customers. These are the ones that do actually matter, as they involve serving your customers, which is the reason you are doing business at the first place. All other expenses are not mandatory. You might as well find less costly alternatives, or eliminate them overall. How will you decide how much to eliminate or to decrease? You will need to go over the budgeting process again. If necessary, go through with more detail this time.
⦁ Ask for more time
Now is the time to renegotiate payment terms with your suppliers. Calculate how much time do you need to accumulate enough cash to keep the business going. You will need to go through your calculations at the 1st step. Allow a 10% - 15% deviation on that to compensate for any deviations on your plans. This means that you have to go the first step again. Its all about numbers at this point.
Start negotiating with your suppliers having on mind the target time you require. Some suppliers might offer more time if you make more purchases. In other occasions you may ask for cash discounts. Have alternatives that suit you most while giving you time to create the opportunity to grow your business. Always avoid conflicts with your suppliers, as you will need to work with them, or other companies operating in their field in the future. Ruining your reputation will never help you.
⦁ Work closely with your team
Selecting your collaborators is key in keeping the business going. Share your vision, your passion and your worries with your team. Who is interested in walking this path with you and who is only for the paycheck. This might be a first indication on choosing the people you will have by your side. Always remember to reward them when you will afford to do so.
Now is the time for action
You have the framework to work on. Firstly, work on your numbers. Study them carefully. Next choose the niche you want to focus on, invest on the products and services that give you the competitive advantage you need. Thirdly work with your customers. Go through their business, see how you can contribute and add value to their work. Choose the ones to invest in and choose the customers that you will terminate your business. Offer credit terms appropriately so that the right customers will benefit.
Next step is to go through the expenses. Select the expenses that are not vital for your company’s value chain and eliminate them if possible. Fifth step is to save time. Contact your suppliers and ask for more time, something vital in saving your company. Sixth is working with your team. Communicate with them your vision and your troubles. Check who is willing to work with you and who will jump off the boat. Make appropriate decisions.
Last but not least, contact us (aethairion@gmail.com) to discuss how we can help you turnaround your company, efficiently and effectively!
Comments