Know how to overcome financial challenges in your business whenever it arises
Financial problems or challenges in business
Most closed businesses around often fail as a result of certain financial-related problems. This is because the owners do not know how to overcome financial problems in business. It’s not even about knowing, but their blunt refusal to know how to overcome financial problems in business.
Business, no matter how it’s done, can’t be without risk. In fact, the terms ‘business’ and ‘risk’ are strong relatives. No business can exist without risk – low or high, as an element.
Some time ago, a new eatery was introduced in my town. Guess what? Barely 6 months later, grasses and lizards became their frequent customers. Now, what do you think is the cause of such happening?
- That this bigtime eatery is about to change location?
- The eatery is facing a possible robbery after threats?
- Or, there are plans in place to switch the business type?
No, the fold-up is not because of any of these. They simply went bankrupt for not knowing how to overcome financial problems in business. I’m even bothered and more piteous about the workers who would become jobless.
The fact that you are here shows that you want to learn how to overcome financial problems in business. Willingly, I’ll help you to avoid being like the once new eatery in my town. In fact, I’m also a then victim that suffered financial problems in my business. So you see, it’ll be an added advantage for you to learn from a man with experiences. Release the accelerator pedal now and stop wasting data.
Top 4 Causes of Financial Problems in Business
Before I show you how to overcome financial problems in business, let me show you the causes. If you are already in a business or about to enter into any business, please don’t omit this section. This section will help you figure out what is wrong (professional) or may become wrong (novice) in the business. After knowing the possible cause(s) of the notable financial setback, you may then be able to procure an instant solution.
Here are the top causes of financial problems in Business you Need to Know
1. Excess Products and Services Provision
Businesses, as you know, thrives on capital. And it is the capital that determines, for instance, the quantity and quality of products you stock. A small capital can, in no way stock massive products but a small number of products. This is one of the powerful cause of financial problems in business. It is even listed as a liability on how to overcome financial problems in business anywhere the world.
In the case of services provision, it is recommended that you meet customer requirement at the level you can attain. This recommendation prohibits providing services that cost more than what your business can take. Do not overdo or financial problems will haunt your business. For example, if you’re integrating house delivery into your present business, the cost of operation and management will go up. Your intent to reach a wider environment is proper. But when it financially affects the business, it brings about financial problems and setbacks.
2. Poor Price Management
Before I go farther on this, I want to expose a business secret to you – old timer or not. The best way to manage prices and prevent setbacks is to keep tabs on competitor prices. Anyway, that’s that. When the pricing management of the business is poor, there’s likely to be financial stutters (breakdown). And when this continues, you’ll not only face financial problems in the business but run out of business.
Some of the business strategies that people practice today in terms of pricing are very deficient. They think that selling at a wowing price is the best way to attract customers or clients. Apart from getting the customers, which you’ll get, the cheapness of your hard-earned products will drain your little profit. This in return means that the business will encounter financial setbacks which is disheartening.
I didn’t know that bootstrapping could easily cause financial problems. But before I commence, let me introduce the word ‘bootstrap’ to you in business. Bootstrapping simply means to start a business without having any external sort of resources or products and even capital help. This does not mean that every business on the basis of bootstrap will suffer financial problems. Instead, it means that it’s one of the hidden top causes of financial problems in business. Even my first business did suffer financial problems because of bootstrap. But, believe me, that millions of businesses – small and big, are suffering this cause without knowing.
4. Poor Plans for Taxation
The Government feeds on so many things to survive and one of these is your business. There are many ways the Government could use to rip you but they choose not to and tax you instead. However, your failure to well-managed your business and contain the taxes invites financial problems at the full rage. Once taxations begin to burden the cash input, it becomes a big problem and often times lead to dreaded bankruptcy.
Lack of proper Marketing & Sales
I explained how to introduce a product to a customer and make them buy, which I believe contains many years of my marketing experience. When you don’t invest much time and energy selling your products and services to prospective clients, you may soon run out of business. So the best way to overcome financial problems in business is to double up on your marketing and sales activities. That way, you will have so much revenue being generated to offset any possible financial loss along the way.
Other causes of financial problems in business include:
- Too much advertisement and brand publicity.
- Deficient business planning and accounting.
- Spending on renovation rather than available products.
- Harboring debts (very bad for businesses – small and large).
How to Overcome Financial Problems in Business
Learn to turn around your business
After citing the causes of unwanted financial problems in business, here is the long-awaited section. On this section, I will show you how to overcome financial problems in business very easily. I sometimes feel like the financial problems I went through was a blessing in disguise. This is because I have been able to build and establish myself bigger despite the dreadful setback. So, I will share with you how I scaled through financial business problems in a very short time.
1. Make Budgets and Honour Them
On how to overcome financial problems in business, budgeting leads the rest. The problem is not even about the budgeting, but honoring it. It is quite difficult to honor business budget list in the sense that expectations always swerve. Example, you may budget for a new asset and then you get a call that the delivery van crashed. Looking at the van, repair cost may be high and purchasing a new one is equally an option. In a situation like this, only strictness can make your transition into solving the financial problem successfully. This is to say that when you honor the budget list, the financial plans will quickly turn out successful and not worse. But going against budget will knock the business further down which is not safe.
How to Honour Budgets Successfully to overcome financial problems in business
- Have it in mind that you’re budgeting for the future.
- Review the budget regularly.
- Be disciplined.
- Set goals.
- Give someone other than yourself to handle the proceedings.
- Remind yourself of the risks of going against the budget frequently.
2. Review of General Costs
Many things fondly increase business expenses. Some of these things can exist in business as if they don’t. In the process of their stay, they feed on available money like worms. In order, on how to overcome financial problems in business, reviewing is the first basic move to make. When a general review is in place, you’ll be able to ascertain what and what is bad for the business. Thereafter, you can suspend certain money-eating activities that are not so meaningful. Reviewing and cutting cost on how to overcome financial problems in business is what I prefer most. This preference is due to the fact that you lose nothing tangible after implementing the decision.
3. Observe Your Non-Business Expenditures
Business money does not only always revolve around the business. Once in a while, the money goes into external things which affect the financial strength of the business. If your business keeps poor account of external disbursement, consider upgrading its standard. Money belonging to the business that you spend outside require proper accounting if you want to overcome financial problems. Thus, with proper accounting of the money you lease outside, you stand a chance of spotting and amending some excesses in expenditure. This would in contribution aid you to save more money like I did when my business was near bankruptcy.
4. Track Your Cash Flow
Cash flow is different from non-business expenses. Cash flow is the total amount of money you bring inside the business, or that you take outside the business before any deduction. Cash flow in business is a two-way concept i.e. money flows in from customers who patronize the business and also goes out. When money comes in, cash flow is positive and thus, indicates that the liquid asset of a business is growing. In this sense, when too much money is exiting the business, it calls for concern. It is for this reason that you would have to make a cash flow report for your business. With a proper cash flow report, you’ll be able to determine particularly, where financial problems are hitting the business from. Here, you can decide what expenses, whether tax, land purchase, renovation, rental and so on to cut off or suspend. Cash flow reports equally help to track down unnecessary miscellaneous expenditure which you can also suspend during a difficult period.
Another basic way on how to overcome financial problems in business is to strategize. Business strategy is not only about making heavy profits. You can strategize for so many reasons. For instance, you can restructure to:
- Pay off debt faster.
- Pace up with competitors.
- Set a pace for competitors to follow.
- Resolve a financial problem that you’re suffering in the business.
There are so many practices you can consider in this case. These practices are often time temporary in the sense that their goal is to fix a business problem.
How to can re-strategize during a period of financial difficulty.
- A slight price increase.
- Customer relationship improvement.
- Level Up with Nearby Competitors or perform a merger.
- Create an online presence.
- Integrate new payment methods in the business. For example, if you didn’t support cashless payment methods, you can include them and inform the public about it.
6. Sell Off Assets and Liabilities
Businesses are set to run on both assets and liable items. To overcome financial difficulty, you’ll have to consider selling off some of these items. But do not sell off the ones with greater productivity ability. For instance, if you’re into water production business, it is not advisable to sell off a liability like a refrigerator. In this case, if you have two delivery vans, pick the rickety one and sell off to cut down maintenance fee during this period.
As for asset business substances, you can either make money selling them off or renting. Renting brings money from time to time but selling off brings bulk cash at once. Let’s say your business building comprises many rooms or an extension land, you could give it out for some time. During the period when the asset is not yours, you can use the money to make improvements to the business.
In essence, selling off both assets and liabilities can help a long way in overcoming financial crisis in business. Once these items, especially liabilities leave the business, the cost will go down and the buyer will pay. As time goes on, you can replace the item with an even better one in the business.
Do not lose your mind that your business is facing financial difficulties, instead, do something. This provision of how to overcome financial problems in business is all that you’ll need to stay head above water. Try to meditate on it, and identify the excesses you have in your business as well. I know what it is to be in this situation and I also know the moves to escape it. The moves are not at all rocket sciences, except that you have to be conscious at all time of the situation.
Forget about how rich you were last year and work your way into a better path this year. Be focused, determined and your success story will turn up like mine. After all, financial difficulty is not something to celebrate as it might oust you in business completely. Please do the right thing and feel free to contact me for further assistance.
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