It’s common to find your business in a cash crunch, especially if you are a new startup business. Without a steady cash flow, business tend to struggle. This sort of situation requires a business owner to make smart decisions and save their business from falling. This article focus on such few tips that can save your struggling business.
When you’re in a battle and desperate enough to save your business, you need to make hard decisions such as cutting costs, prioritising payables, regulating cash flow by turning to sources such as business loans.
In fact, a lot of businesses go for loans as they can be easy to get approved and are often paid immediately, making it a great short term solution. But, as always its best to get to the root course of your business cash flow problem to save your business.
Many experts say a business loan should be your last resort. Business finance experts Lend say, “depending on the amount you borrow, you may need to provide a personal guarantee, which means you will be responsible for repayment if your business is unable to meet its obligations”. Meaning you will need access your personal savings to repay the amount owed on the business loan.
So what other options does a business have? Let’s look at some of the ways that can help business owners save their business:
Increase Cash Flow
One of the most common reasons for a business to struggle and even fail is due to a poor cash flow.
It is important to have a running cash flow so that day to day operations are done smoothly. Hence, this is among the most profitable things a business needs to do.
Here is how you can save your struggling business by improving the cash flow:
- Take Loans:
Speaking of increasing the cash flow, the only option feasible is to get a business loan. Business loans are given on the basis of credit scores which should be above 700 to borrow huge amounts from banks and a score of 550+ for taking medium amount of loan from online lenders or lending companies.
Other than that, business owners need to put some sort of collateral at stake such as real estate, vehicle or assets for security purposes. You can even go for balloon loans which give borrowers a free hand on either paying the interest rate and the principal on monthly basis or just paying the interest rate, the principal amount is paid on the final date. This way, businesses can boost their operations and earn good profits. Once they do, they can pay the principal amount at the end without any trouble and come out of their financial issues without much loss.
- Reduce Costs
Another major reason for businesses to struggle with financial issues is because they hardly give any consideration to extra costs nor do they try to cut the existing costs.
Huge business expenses play a vital role in disrupting the cash flow of a business and leave them in a struggling state.
Here are some proven ways to reduce business expenses:
1) Office Space:
Start with considering the office space, especially if you are on lease or rent. The bigger the space, the more rent you have to pay and this can be a huge business expense.
If you have a lot of wasted space, you can consider moving to another office that’s cheaper for you.
Another option is to consider subletting any unused office space. This could half your rent costs.
Electricity usage can also add up a lot to business expenses. Try to switch to LEDs and energy saving appliances at your workplace and save up to 30% of energy costs.
3) Travelling Expense:
Save costs on traveling expense by cutting off unnecessary meetings. Doing so will save money on accommodation and transport expenses. You can have online meetings thanks to video conferences.
4) Automate Processes:
Automate processes where possible and save time. Many departments can be completely automated thanks to the availability of different software that can make the job easy.