Sometimes in the business world, there are things that happen that are beyond our control. We have witnessed time and again the impacts of a financial crisis when business is the subject. History is filled with fossils of dead ventures that were suddenly strangled out of business as a result of liquidity trouble. Being human the way we are, sometimes we comfort ourselves with the thoughts of it will not happen again.
The truth of the matter is that this crisis will not stop popping up periodically. There are various factors attributed to a financial crisis. A financial system built on excess debt is a classic example of the various causes. An overpriced asset is another example of the factors that contribute to the financial crisis in business.
It is safe to say nearly almost all businesses at some point have or has experienced a financial crisis. Therefore it is important to always prepare in advance for this eventuality. Otherwise, you might become the frog that did not realize the water it was in was warming up. So here are some of the tricks to beat the financial crisis headed your way and make your business a success.
This is actually one area the many fail people the test. You do not require a PhD. in financial management in order to be a good manager. All you have to do is just cut the financial moderations. The same way you go to the gym to cut those excess fats from your body, do the same to your business. Cut the excess fats, in this case, all excess finances. As soon as you realize that things have started going south, do an intensive review of the expenditure and your income. You will be surprised by how this will be of a great deal in getting out of the turmoil.
Identify any areas where you think your financial cuts can be applied even if they are small and appear to have no significance. However, do not be hoisted by your own petard if you know what I mean. This includes giving up strategic positions, offloading productive effective employees, or making changes that might end up causing more harm than good. You might be shooting yourself on the foot. Just put your focus on areas you think might impact positively on the business.
Cash is Paramount
Some people tend to forget that cash is the ultimate business king in times of crisis. If you want to grow and increase the value of your company, you might want to have your own balance sheet. I know during a crisis it can be an uphill task to sell and convert assets into liquid cash. In order to survive a financial crisis, you need to have cash and lots of it. Do these as you wait for the storm to die down. But it is also important to keep in mind that if you want to stay afloat you have to stay liquid.
For invoices, it is recommended to use selective invoice finance during a crisis. You might be wondering how selective invoice finance works? This type of invoice is quite different from the rest. This is because it does not require any agreement for the sales lager. Here you get to choose the type of invoice you have advanced. This gives you the flexibility to change your cash flow by single invoice sells or you opt for a few at a time depending on the needs of your business.
Debts Lending and Loans
In times of crisis, it is quite common to see creditors get scared. This comes naturally. They fear that their debtors might go out of business and may not recover and be able to pay them back. Due to this factor, they are always ready to assist borrowers to refinance and restructure the debts if this increases the probability of the debtors not defaulting. In a crisis, it is very important to be current wilt all the debts that have your print on. However, always open the third eye and look out for the options that are available in rebuilding your loans and other things that can be paid. You might get lucky and get yourself a good negotiation through better terms and this will enable you to keep the cash.
Accept Your Financial Situation
When experiencing difficulty, the first thing to do in order to recover is to accept your statement. Stop ignoring or denying the situation. This does not help, as a matter of fact, it does worsen the situation because you will not be focusing on the solution rather turning a blind eye on the problem. Accepting a crisis empowers you to tackle it and start finding the solutions. Negative emotions could be normal but try and use your energy positively, apply solution-finding actions.