If your business is on the brink of financial failure, you’re not alone. Nearly half of all businesses in the United States fail in their first five years. However, by acting early and not being afraid to take drastic measures, there’s no reason why your business has to form part of those statistics. It’s time to take action. Here are four drastic measures to get your business finances back on track fast.
Request Help from Financial Experts
You have to spend money to make money, and that can mean investing in the services of financial experts. When you lack essential financial skills, there can be a great deal of value in relying on someone who has them.
Explore part-time and virtual CFO services, where you can hire a top-tier CFO with deep industry experience and benefit from their services remotely and on a limited-hour model. If your business finances are in disarray, it’s also worth connecting with an accountant or bookkeeper and a financial advisor for guidance, organization, and planning. You don’t have to feel like a failure by asking for help. Financial experts exist to help business owners regain control.
Take Aggressive Cost-Cutting Measures
When you’re spending more than you’re bringing in, it’s not a sustainable practice. Eventually, your bank account will run dry, and your business can be in serious trouble. As a result, it becomes crucial to take aggressive cost-cutting measures.
Eliminate non-essential expenses, like business perks and unnecessary subscriptions. If you regularly work with suppliers and vendors, renegotiate payment terms or rates. Now is also a good time to shop around and look for cheaper alternatives.
When you have significant overheads, consider downsizing your office space, discussing rent reductions, or adopting a remote work model. By 2025, tens of millions of Americans were already working remotely. The cost savings can be significant when your commercial rent is tens of thousands of dollars every year.
Focus On Cashflow
While not always the biggest problem, cash flow issues can arise when your income is insufficient to cover everyday expenses. With cost-cutting measures in place, it’s time to focus on generating more revenue.
Start following up on all outstanding invoices and implement stricter credit control procedures. If your accounting software allows, use automated reminders and consider offering a small discount to early payers.
If you have several outstanding invoices and now have a cash flow gap, it may be worth exploring invoice financing. This is where you sell your unpaid invoices to a third party to receive immediate cash.
Implement Business Changes for Resilience
After several weeks, months, or years of fighting for financial stability, you may now be realizing that your business model isn’t resilient and you need to make changes. Perform a financial assessment to understand the cause of your financial distress and determine the most profitable versus the least profitable parts of your business.
Next, eliminate your unprofitable offerings so you can reallocate resources and focus on the parts that are profitable. Finally, revisit your pricing to ensure it’s aligned with the market and communicate with your employees, suppliers, and creditors.
When your business is in a dire financial situation, you need to act fast. Every day counts toward getting your finances back on track. By seeking expert help, cutting costs, boosting cash flow, and making crucial business changes, you may improve your chances of achieving a healthier bottom line for long-term success.
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