How to Survive When Your Business Is Losing Money
So, how do you stay afloat as your business is losing money? Depending on the cause, you’ll want to find different solutions that work for your business. The following are a few tips for a survival guide on staying afloat when your business isn’t doing so well.
1. Getting Your Prices Right
One of the most important things you can do is set the right prices for your product or service. Understanding the market value of your services on top of the proper evaluation of your business is essential for knowing how to price your products. If you price them too low, then you won’t make enough revenue; if you price them too high, you’ll turn away potential customers for being too overpriced. It’s much more common for small businesses to be underpriced than priced too high.
2. Providing Great Customer Service
Something to consider is the customer service of your business. Suppose you have employees that don’t reflect the positive attitude you’d like to convey, or you’re too short-staffed to give the quality of time your customers should have. In that case, these are considerations for why people may not be using your products or services. If you can differentiate yourself in the marketplace with great customer service, than you can also be priced a bit higher and increase profits.
3. Adjusting Your Business Plan
When you encounter a cash flow shortage, this may be time to reevaluate your business plan, process, operations, and expenses. If you haven’t changed your business plan since you’ve grown, it may be time to change things since your business has new demands to continue its growth.
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4. Accelerating Your Receivables
One method you could consider when you’re in a tight bind is to speed up your receivables. This method may not work for every business type, as retail or restaurants rely on customers coming in for the service. However, you can talk with your accountant to learn the best way to do this. Process changes you can consider include:
- Asking new customers for a deposit or partial payment
- Sending your invoices early
- Sending invoices more frequently
- Focusing on your past due accounts
- Making it convenient for clients to pay
5. Negotiating Your Payables
Something to consider when your business is losing money, and you’re trying to stay afloat, is delaying or reducing the amount of cash flowing out of your company. You can try negotiating or inquiring about delayed payments with your vendors. There is a chance you could get some leeway or a reduced obligation from your utility providers that allow you to save some money for other obligations.
6. Considering Borrowing Options
Consider bringing in money to your company through a business loan or credit card advance. It’s important to note that before you take on debt, you should be sure to understand the interest rates and have considered other options. Speaking with your CFO or accountant can be a great way to understand the best options for you.
7. Cutting Down on Expenses
One of the biggest things you can do when your business is losing money is to cut expenses. Some things for running your business may be necessary, such as overhead costs. However, when you analyze your assets, expenses, and what is necessary for your business, there is a chance you’ll find something you’re spending money on that could be cut.
8. Selling Non-Essential Assets
Similar to cutting down on expenses, you can consider which assets you don’t need or use anymore. Businesses can often have assets that aren’t used regularly, if at all, and selling them can be a great way to get some excess cash when you’re in a bind.