Small businesses usually don’t have enough money to survive through a bad year, so owners have to make careful decisions on how to cut the costs and increase the revenue. Whether it’s tough competition, financial obstacles, or being unprepared for rapid growth of business, there are a lot of reasons why many companies end up in debt within five years. So, should you panic? The short answer is no. The long answer is that you should make a number of changes to reduce the impact of problems that caused your small business to fail.
Cut the Costs
Maybe you’ve got ahead of yourself and hired a lot of skilled people in preparation for your small business growth. The first thing you should do is to stop hiring. Don’t just fire people straight away, it’s bad for business and your reputation, especially with the power of social media today. The last thing you need is to get out of the ditch and fall into a bigger one. Analyze the costs and performances and if you do have to fire a number of people, try to explain it to them that it’s either that or bankruptcy. At this stage you need to cut all the expenses that aren’t crucial for the survival of your business.
Consider Short-Term Financing
While cutting unnecessary expenses might buy you some time, you’ll still want some investment money if you want to turn things around for your business. You should be looking for short-term loans with very low interest rates. This will provide you with an influx of finances that you can now start investing. Of course, it goes without saying that by now you should’ve analyzed your business objectively and already have an idea how to optimize it. Try not to use this money on running costs, but for actual investments into projects that can pay you back. Or, you can use it to improve your advertising, which brings us to our next step.
Utilize Social Media
You’re probably aware by now that social media has completely changed the world of advertising. But are you trying to use it to your advantage? Today, it’s imperative for every business to have a presence on social media. Try to emphasize your interest in customer feedback, answer all comments regarding your products and have social media pages set-up in such a way that they actually reflect your products or services. You need capable and qualified people running the show for you, so if you didn’t already, hire some experts on social media advertising.
Get a Smaller Office
You might have rented a huge office and equipped it to reflect your high expectations before you realized that things aren’t going so well. If so, don’t think twice about returning to your small office where you started with a small team. You’ll be surprised how much money you’ll be able to save, and after all, it’s only until you get back on your feet. You won’t be able to fit all your equipment there, but you can easily mitigate that by renting an inexpensive storage unit and storing your stuff there at affordable price.
Once you’ve turned things around, you’re going to need all that stuff in perfect condition, and storing it somewhere can help you with that.
If you really need to cut the costs and the smaller office won’t help you, consider working from home. With the development of technology, it’s never been easier to track someone’s work performance remotely. This way of running a business has its pros and cons, but if you’re in a desperate position, it will help you immensely. You’ll save on rent, cleaning, electricity expenses, travelling times, and even your workers will thank you for it. Not to mention that it can actually boost morale with your employees, as they won’t be under constant pressure that someone’s eyeing their performance, considering how the business is going.
Setbacks Are Opportunities
Even if nothing works out for you, and you have to close the doors to your business, you’ll still be richer for the experience this all brought you. If you did your best to turn things around, chances are that next time you start a business you’ll know exactly what to do and how to do it from the get-go. Businesses fail all the time, it’s how things work today, but having experienced it first-hand might just prove more valuable than striking a jackpot in your first try.