Handling the financial crisis helps entrepreneurs get back to business.
The financial crisis is a condition in which small and large companies go through daily. This happens because there is unpreparedness when it comes to managing the business itself, breakdowns, disorganized finances, excessive spending, among other factors that can make the entrepreneur think about closing the company. But how to go through this crisis and recover the business?
1 – Recognize the problem
Every entrepreneur, when starting a project, places all his positive expectations and does not prepare himself to deal with the failure that may occur. Being faced with what you dreamed of in a negative situation becomes quite discouraging. For this moment of fragility to be remedied, the entrepreneur must give up apologies and try to solve the problem, recognizing that the company is going through a crisis and that it is necessary to review irregular attitudes to avoid further damage to business. Humility to recognize mistakes and use them as a way of learning is the first step for the company to get out of the red.
2 – Know how to identify the current situation of the company
Understanding the current situation of your business is also an important step to get the company back up and running. The entrepreneur needs to check the cash flow and understand how the situation reached the desperate point for the company to continue. You need to be aware of all cash flow information, look for receipts and be aware of what has been spent. The entrepreneur should not be afraid to add up the debts and see the total amount he will need to pay off. At first the amounts may be frightening, but it is necessary to face the problem and go after solutions to solve this financial breakdown.
3 – Negotiate debts and be transparent with employees and suppliers
A good step to improve the financial crisis of your enterprise is to renegotiate debts with creditors. It is important to contact banks, suppliers and service companies and explain your situation. Nowadays it is uncommon for a company or institution not to accept a proposal for renegotiation. Another important factor when renegotiating debts is to pay attention to the amounts that the entrepreneur will be able to pay per month, so he won’t have to overspend once again. The entrepreneur should also make a list of the debts that are more urgent and prioritize salaries in arrears, in order not to face any labor claims. Cutting unnecessary costs is crucial for the entrepreneur to recover his business. Avoid dismissals of employees to prevent them from accumulating functions and reduce overheads like water, electricity, internet and telephone. Transparency in explaining the situation to staff is also critical. Ask for everyone’s collaboration until the situation is settled, because thanks to teamwork everything will flow better and the company will be able to get back on track.
4 – Keep personal finances apart from the company’s finances
Learn how to keep personal finances apart from the company’s finances. Bear in mind that you need to have two separate accounts and you will not be able to withdraw money from the company’s cash to improve personal losses. This will decrease profits and keep the situation at its worst. Restructure the finances, create spreadsheets to divide the expenses and implement measures to get everything better organized. Once personal finances are more organized, it will be much easier to get around the company’s crisis.
5- Control the cash flow
Be sure to control your cash flow on a daily basis. It is very important to keep an eye on everything that comes in and out so the financial stability of the company remains intact. Use developers, websites, software and management applications to record all expenditures and purchases. Under this approach, it becomes easier to understand where the entrepreneur is spending his money. The cash flow also allows the entrepreneur to make a forecast of the upcoming months, knowing what you can spend and what you need to store to avoid negating the balance.
With these practices in hand, it will be much easier to get around the financial crisis and take actions that will improve the company and keep it active for much longer. Starting over is the key to getting out of financial trouble.
