Getting through a business crisis can be an arduous and stressful task. That’s why we’re here to help. Here’s all you need to know about the basics of business crisis management.
Being an entrepreneur isn’t as easy as it sounds. Apart from putting in all those all-nighters, and all that effort, you also need to be a good decision-maker. But, let’s face it. No matter how good you are at what you do, sometimes things don’t go according to plan.
If you’re going through a rough patch business-wise, and are frantically looking for ways to make things right, remember that you’re not alone. There are many young businesspeople like you trying their hand at new business strategies and plans.
Sometimes these plans work and sometimes they don’t. That’s business after all. However, the most important thing is to knuckle down and not lose hope when things get rough.
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All you need is a plan and some self-motivation to get back on track. We’re here to help you with both by giving you the lowdown on what you need to sail through the bad times.
Keep calm and face it!
First things first! Calm yourself down. At the end of the day, it’s just a business crisis. The world hasn’t ended. You still have the hope, time and ways of making things work in your favour. Just stay calm and try to figure things out.
Worrying unnecessarily and panicking has never helped anyone. Regardless of whether it’s your fault or someone else’s, you need to put it aside for the time being and start working on a recovery plan. The earlier you pick up the pieces and glue them together, the faster you can get your business back on track.
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Identify the cause
Now that you’re calm and ready to take things ahead, let’s proceed. Before starting with ways to help your business overcome the bad times, you need to put your thinking cap on.
Start looking for possible causes that led to the crisis you find your business in. The first step to coming up with a solution is to identify its root cause. Once you know what led to the rough patch your business is going through, you can formulate a plan accordingly and install fail-safes so that it doesn’t happen again in the future.
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Check your resources
Now that you know the cause of the problem, or at least have a vague idea about the issue, it’s time to run a check on your resources. As a businessperson, you must always know the status of your resources. This includes manpower, funds, stakeholders, etc. In short, you must be aware of every minute detail of your business.
Having a clear idea about everything can help you plan better. Since it’s a crisis, it’s likely your resources will be stretched to their limits. Utilising them well and ensuring that you have enough left to get you through a rough patch is important.
Drop everything and run a quick check on your inventory. This also means analysing your debit and credit. Take stock of any outstanding dues as well as any incoming funds, both current and expected.
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Set a target
Be specific about how you want to tackle the crisis and make sure that it’s measurable so that you can track the progress. The goals that you plan must be attainable. Stretching yourself a bit is okay, but don’t overdo it.
Try stepping out of your comfort zone, but don’t make it too hard for yourself. It has to be a balance. Your goals must be realistic. If you’re already in a lot of debt, be very cautious with your finances.
Timing plays a great role in determining your success or failure, which is why all your goals must also have a deadline. Deadlines can significantly improve productivity levels across all levels and can help mitigate any further damage from taking place.
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Chalk out a plan
Now that you have a set of targets in mind, you know what you need to aim for. Analyse your current situation and chalk out a plan accordingly.
You must know when you need to be aggressive with your plan and when you need to step back. It is imperative that you and your business follow the plan diligently, and also make sure that your plan is flexible enough to allow for any contingencies.
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Cut down on unnecessary expenses
Apart from looking into the problems of your business, you also need to balance your spending habits. Now’s a good time to start rethinking your money decisions before actually swiping your Credit Card.
You might also need to make some changes to your lifestyle. For instance, you might want to consider giving up that cable connection or saving that rent money by moving in with your parents or close friends. Whatever works for you! The aim is to minimise unnecessary expenditure by any means possible. If you think something can help you save more (no matter how small it is), just do it!
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It’s action time!
Now that you’ve formulated a plan, it’s time to execute it. Remember, time is money. You don’t want any unnecessary delays derailing you at this point.
Quick and efficient execution is key to getting out of a financial crisis. You will need to make sure that every section of your business is performing according to your plan’s expectations.
Check your product/service
One of the biggest causes of your business’s failure could be the product/service you offer. Maybe it’s too outdated for your current customer base. Run a quick SWOT (Strengths Weaknesses Opportunities Threats) analysis. You’ll find all your answers right there.
If your product/service lacks uniqueness, it’s time to find a USP. What makes it different from all the other products/services in the market? Once you know the reason, you’ll be well on your way towards solving the problem.
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Move to a smaller office space
If you’ve occupied a big office space, you can save a lot on rent by moving into a smaller area. Think about it. What’s more important? Having a huge, swanky office or a successful business?
The choice is yours. Considering the position you’re in, we’re sure you’d want to focus on getting your business out of the doldrums first before you think about anything else.
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Renegotiate your loans
If your business is under severe financial strain, it’s probably time to think about renegotiating any loans you took out to launch your business. Although all loans may not be that flexible, it is certainly worth a try.
Speak to your lenders openly. Instead of hiding your financial situation and missing payments, it’s better to be open about it. They may even be able to offer solutions to help you through your current crisis. All you need to do is ask!
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Pack it in!
Sometimes, things just don’t work out even if you’ve done your best to keep things afloat. While you must certainly do everything in your power to help your business ride out any rough patches, it is also important to know when to throw in the towel.
There have been many instances of businesses that have suffered immeasurable losses and have even undergone bankruptcy due to sticking to a plan that just isn’t working.
If you think that there’s no way back, then the best thing you could do is cut your losses and shut shop. You could sell your business as well as all associated assets to pay off any outstanding dues so you can start again in future with a clean slate.
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We know it’s been a rough ride for you, but we want you to hang in there. You’re stronger than all your worries put together and you can find solutions to all your problems. All you need to do is keep calm and think things through before rushing into impulsive decision-making.
We hope that this helps you and your business sail through times of strife. Need more on financial management? It’s all just a click away.