Despite your best efforts and taking all of the right steps, you’re beginning to see the writing on the wall: your business is starting to fail. There’s nothing to be ashamed of; only 50% of small businesses succeed in their first four or five years. When you’re not only competing with other small businesses, but also with large corporations, it’s difficult to offer the lowest prices. Fortunately, you still have time before calling it quits to turn things around. Use these helpful tips to save your business before it’s too late.
Re-assess your budget and spending
If consumers aren’t coming to you to meet their needs, you may need to lower prices. Take a look at your spreadsheets and look for any possible way to pinch pennies. Cutting back on employee expenses is the best place to begin. Start taking over basic shifts yourself and cut back on the number of hours you’re paying for. This will give you an opportunity to see how your business is operating on a day to day basis and inspire new ways to improve it.
Even if you can’t make a decent profit with lower prices, the increase in your consumer base could be exactly what you need to bounce back from the slump you’re in. Offer bulk discounts and special deals to your current clients so they don’t go anywhere.
One of the first things small business owners usually get behind on in terms of business expenses is taxes. You may be able to get away without paying taxes for a time, but sooner or later, Uncle Sam is going to collect. If you’re staring down the barrel of an IRS tax levy, contact a tax representative immediately. You won’t be able to save your business if you the IRS puts a lien on your property or seizes your assets.
As a business owner, you should be taking advantage of every tax cut that you possibly can. Are you making local deliveries? Sponsoring a local sports team? These are just a few examples of potential write-offs for your taxes.
Look for new wholesalers who can offer you the goods you need at a reduced cost. For example, if you run a small bakery, look for a new source of flower that doesn’t cost as much as your current provider. You might be able to use the new provider as leverage to renegotiate prices with your current one. When experimenting with new wholesalers, it’s vital that you test their products first, so you don’t end up compromising the quality of your own goods.
Prioritize your payables
When your business is failing, you owe more than your available cash will allow you to dish out. As a result, you need to prioritize what you can afford to pay in order to keep the doors open.
- Start with any financial obligations that could shut your business down. Things like employee wages, rent or lease payments, and insurance should be high on your list of priorities.
- The next thing you need to worry about are expenses that come with penalties for late payments. Taxes often come with hefty penalties if they aren’t paid on time, so try to avoid falling behind.
- Finally, any payment that is already late should be the next one in line to get paid off. If you can, try not to let any bill go two cycles past its due date.
Talk to creditors
When calls from collection agencies keep pouring in, it’s easy to ignore them and hide under a rock. This this is the last thing you should do. Make sure you stay in close contact with all your creditors; explain your situation and assure them that you plan on paying what you owe as soon as you can. You might be surprised to find how willing they are to work with you.
If you have a bank debt and an account nearing delinquency, proactively communicate with your banker as well. The bank's primary goal is getting paid back what they’re owed; they’re only likely to terminate your loan if they determine they won’t get repaid otherwise.
Don’t lose hope! While things might look bleak now, it’s not too late to turn them around. With a little bit of extra time spent at the shop and some creative money management, you can keep your business from going under.
Adam Pepka enjoys a comfortable life in Tucson, Arizona. Growing up reading authors such as Timothy Ferris, and feeling inspired by their bootstrap beginnings, Adam was determined to find financial freedom himself. He soon became a successful real estate mogul after one deal led to another, and not long after Adam began his own fix-and-flip enterprise. Apart from real estate, he’s very much interested in Silicon Valley, venture startups and the technology industry. He watches that arena with a careful eye, and is the first to alert his readers to major news or events.