In the beginning of financing a new business venture, the excitement fuels a desire to make what you’ve built into a stunning success. But unfortunately, you can find yourself in a situation where your small businesses is in financial trouble. And figuring out how to get out of this mess--as well as how you got in it--can leave you wondering where to even begin.
If you’re not seeing the money you need, try looking into these common areas to find out how to get your company back on the road to stability and success again.
Compare Budget to Actual Expenditures
Your business budget is your financial roadmap. (Hopefully you have one!) This is a good time to get it out and compare it to the actual expenditures recorded in your accounting software and see if there’s a cash leak somewhere.
It’s possible that expense accounts are getting out of hand, money is being spent in ways that you weren’t aware of, or your costs have simply gone up dramatically for a variety of reasons. Whatever the cause is, once you identify the problem you can truly start addressing it.
Get a clear picture of how your debt is structured. It might be possible to spread short-term debt over a longer time period to lower your payments, or convert short-term debt into long-term debt to increase cash on hand.
Working with a debt restructuring company is a much more proactive option for dealing with cash flow problems than simply not paying creditors and hiding from collection agencies.
Talk to Your Banker
Your banker should be the first person to turn to in times of financial crisis. They have the experience and knowledge to give you the best advice for your individual situation.
When it comes to money problems, as with other types of issues, don’t put off talking about it. It might be uncomfortable, but being proactive and speaking up about problems in the early stages while they’re still small means that they will be simpler and easier to solve. Whatever you do, don’t wait until the issue has progressed and gained complexity.
One option your banker might suggest is a Small Business Administration guaranteed loan, which the SBA partially backs, or other possible financial assistance available for small businesses. These grants and loans can help you in the event of a temporary cash dip and set your company back on track.
Check Your Insurance
Get out the insurance policies you have on your business and see if there is anywhere you feel comfortable raising your deductible and lowering your premiums. While changing insurance terms can easily increase your cash flow, having at least adequate insurance is still a priority so that in the event of a catastrophe, you won’t find yourself in an even bigger financial mess if the payments won’t cover your losses.
If some items that you’re insuring aren’t critical, consider cancelling the insurance on them at least temporarily.
Working your way through a financial struggle is tough, but many small business owners have done it before and come out successfully on the other side. By taking these steps, you’ll start your business back on the path to profitability and keep your entrepreneurial spirit alive.
About the Author: Jeff Reinstein has been helping businesses grow as the CEO of Premier Business Centers since 2002. He has been a driving force in expanding the company from 9 locations to 70.