How to Rescue a Business About Bankruptcy
Fewer and fewer customers, fewer profits, accounts that accumulate, inventory that does not move, high debt and money that is no longer enough, are clear signs that your business is about to go bankrupt and needs to be rescued urgently.
Fortunately, in the midst of a crisis of this magnitude, we have good news for you.
We will not say it’s easy, but if you’re willing to take action responsibly. Your business can get ahead if you follow these tips.
Companies can suffer for many reasons. Some may be due to external factors which are often unavoidable and others are due to internal factors that can be prevented and often amended.
The most important thing before starting any rescue action for your business is to make a deep and conscious analysis about why we arrived at the situation in which we are.
This is very similar to going to the doctor. Many times we go when we feel bad or when our body already has symptoms that require urgent medical intervention, although we do not recognize that we are the ones who have allowed ourselves to reach that state of gravity. Keep reading http://phase-2.org/business/excellent-business-ideas-to-undertake-part-time/
With the company, it happens the same. We make mistakes, we fall into carelessness, irresponsibility, presumption and when we realize, reversing the effects of bad decisions or actions can be quite complicated.
These are some of the common reasons why a business might weaken to the point of bankruptcy:
International crisis that could affect your markets or the policies with which you import and export products, if applicable.
Excessive and uncontrolled expenses. This is due to the lack of a budget and its just execution.
High operating costs (local, services, infrastructure, etc.)
Theft within the company by employees or situations that put the reputation of the company and its capital at risk
Contingencies that will seriously affect the budget as unforeseen events, accidents or sanctions of any kind
A bad business projection
Loose sellers and/or lack of good sales and marketing strategies
Not having medium and long-term goals
A too expensive return
High operating expenses
Irresponsible management executing discretionary expenses
Continued indebtedness without calculated risk
Not detecting the risk indicators in time can lead your business to close its doors. However, in most cases when the directors of a company assume their responsibility and manage to take corrective actions, companies can be saved.
If you notice any of the symptoms mentioned, here are the tips to follow:
1.Identify the risk factors in your company
Gather an emergency team to brainstorm and try to determine as honestly as possible the 2 main causes of the business going badly.
Similar to the doctor. To have an effective treatment, the main symptoms of the disease must be clearly determined. Be honest with yourself and once you identify the risk indicators. Then be prepared to take immediate corrective action, whatever it may be.
If necessary, help yourself with a professional business consultantthat helps you to visualize with greater clarity the possible blind spots. At this point, you must make drastic decisions but there is no other alternative to survive. Continue Reading – 4 Simple Tips For Business Owners
One of the main symptoms that something is wrong is that money is not enough.
Hence, it is essential to reduce as a matter of urgency any expense that does not contribute positively to the operation of the business and to generate profits: Too much publicity, purchase of unnecessary items, fuel rationing, frequency of maintenance, rent or rental of offices that are not functional, consumption in telephone lines, meals or trips, etc.
3.Evaluate cutting your staff and the redistribution of work
Although it may sound hard to mention, in times of crisis the measures must be extreme. It is probably time to reduce personnel and redistribute the work.
Remember that we are talking about rescuing your company so if this is not done, your people would lose their job anyway. You must make them aware of them and explain that it is the only alternative to get ahead. This will help you reduce your labor liabilities and decongest the costs per payroll that are usually quite high.
You can even negotiate the payment of labor liabilities in installments to reduce the initial impact (check the labor laws of your country about this). To do this intelligently you must do a study with your most trusted partners to make the right decisions.
Either by direct or indirect theft, diversion of funds. Alteration of prices or any other method of money leakage you must detect it and cut it without hesitation.
Take the time to analyze the processes within your organization and determine the weaknesses in the system that will allow “employed” employees to take advantage of what they should not. Important, do not underestimate the “ant” expenses that are usually not very visible but represent huge losses in the long term.
5.Put an “up to here” to indiscriminate personal expenses
A bad habit that can make a business fail without mercy is the disorderly use of money by their owners or directors. This often happens without you being aware of it because you do not have clear reports that reflect it.
So if you really want to come out and breathe, it’s important that you start by being the example yourself. Cut out all unnecessary personal expenses and assign a realistic salary according to the situation of your business. If you have a corporate credit card, request lower limits and restrict its use as much as possible. And if necessary, designates the responsibility of managing the money to an administrator who does it responsibly.
Either because of the crisis or for any other reason, finally, the only way for a business to grow is by selling. If you sell, there is no money. Evaluate your marketing and sales strategy. Evaluate your sellers. Set goals and develop an emergency plan that represents an increase in results in the short term.
It eliminates all idle, comfortable personnel or that due to seniority have to remain without contributing results. In times of crisis, you must sell, sell and sell. And as I have said in other posts, it is time to leave your desk work go out and be yourself the best seller in your organization. This will create tremendous synergy!
7.Evaluate your prices
The rescue actions of a business about to go bankrupt have to be a combination of more sales and fewer costs. And for there to be more sales it is important to evaluate the prices of your products and services. As well as the value they bring.
In times of crisis, a moderate adjustment can mean keeping those customers loyal and even capturing some potential market of people who now more than ever are looking for more favorable pricing options.
8.Implements a collection plan
Many companies die because their creditors do not pay them. And many companies do not charge because they do not have the system or the character to claim their payments. This is the time to implement a collection strategy that allows you to recover capital accumulated in accounts receivable.
If you do not know how to do it, hire a temporary or freelance debt collector to help you recover delinquent loans. This will oxygenate your finances and help you get ahead.
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As you can see, the most important thing in all this is to act quickly and avoid getting into debt blindly. So one last piece of advice that I should add and that is life or death is NOT to lend money to pay off debts. Using credit cards to pay for services or commitments with suppliers can be like the “coup de grace” for a weak and dying business.
Avoid doing this at all costs. It is tempting to have access to extra financings or quick loans with high rates. But you should try not to get caught in that trap.
And finally, I love to remember the story of Donald Trump, a character that today does not sympathize with everyone but in the 80s went bankrupt and came to have a debt of US $ 900 million. You can imagine it !?
So regardless of whether it is to your liking. It is a good example that any entrepreneur can rise from the acutest crisis and emerge triumphantly.
Many gave it as irremediably broken, however, it was raised and today is one of the most important real estate magnates in the world.
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