Running a business is not an easy task. There are many variables involved which might hamper the performance of the business. The economic condition of your country, your chosen business and lack of availability of the raw materials might be determinants of the poor performance of your business. How to bring your company out of a financial crisis? A few of the simplest first-priority actions that firms typically take to reduce costs are as follows.
Reduce staff costs
Reducing recurring costs is considered the main focus of firms facing sales declines. Around the world, the largest oil and gas giants, banking structures are cutting staff by tens of thousands of units. This helps them reduce costs. Therefore, if there is such an opportunity, first of all, non-core specialists should be abandoned. The number of employees in all departments engaged in auxiliary functions should be reduced. Often during a crisis, sales departments are cut, dismissing part of managers. It’s better to save leading managers. These can come in handy at any time.
Another option to reduce staff costs is to reduce employee wages. It can be combined with a shorter working week, and then you will not lose experienced specialists and reduce staff costs.
If your enterprise has several branches, you should pay attention to those that have the least potential. For example, if a branch brings the least profit and your company was there only for advertising purposes, such a structural unit should be closed first.
Reduced rental costs
Office space can be easily moved to cheaper locations – it will also help reduce costs. Smaller areas can also be rented because after coupling strategies like reducing staff, fewer people will remain. If the owner of the leased premises has a good relationship, he can give a discount themselves, if only your company does not change the place as it will also not profit them if you move out. In a crisis, it is not so easy to find a client to rent premises.
Many options can be viable when you think of Where to get financing for your small business? Choose the best ones but do keep in mind that your business should be able to pay back the loaned amount.
Now many trading companies and individual entrepreneurs are actively creating online stores as a cheaper replacement for real retail outlets. The cost of a virtual store is much less; it’s enough to work out the logistics, delivery and create a user-friendly site.
Instead of several cashier sellers in an online store, it is enough to have one content manager with a consultant function – this specialist will update the information on the site, add content for promotion (SEO articles, descriptions and photos of goods) and answer customer calls. You can conclude an agreement with the courier service, or you can have your own courier in the state (depending on the product or service, the courier may not be needed at all). The advantages are obvious: there is no need to pay for retail space, tax and wage costs are reduced.
Legal and accounting optimization
If your company has several tax regimes, you can optimize them by choosing the most favorable one. All activities can be transferred to the simplified tax system, where there is much less regular reporting and you can win with taxes. You can use legal optimization if you transfer activities from LLC to IP, or if you have several LLCs – combine them into one. The result should be a reduction in regular expenses.
To lease part of the business
If you own production facilities, retail, warehouse or office space, special equipment, you can lease these assets. For example, on the territory of your store, you can free up some space for a retail outlet and rent out. The main thing is not to create a competitor for yourself – to find a tenant who will not intersect with you. There is a stable demand for construction equipment and it can also be rented out.
Focus on the main direction
In a crisis, the main thing is to maintain your position. It is most important to maintain the main activity in which your company has achieved the greatest success in previous years. It is better to refuse any risky extensions, dubious diversifications (which are advised by different business analysts and strategists).
Where to find the money for a business? This issue occupies almost all individual entrepreneurs and founders of legal entities. Most types of businesses require a certain amount of upfront investment. Even if you need only the Internet, a phone to start, and also for the start period you need to pay for accommodation, meals, and travel, for this all the same amount of money is required.
In addition, if you need to purchase furniture and equipment for the office, you can also get a loan upon purchase – banks are much more willing to give out consumer loans.
Don’t try to get in an already saturated market
During the crisis, the decline in consumption leads to the fact that many businesses simply go broke due to the inability to make a profit. Diversification and the transition to another niche may take you the last resources, which means you will lose the ability to act quickly. For freedom of action, at least a small airbag should remain and it is better to save liquidity in finances for a time of crisis. In addition, more successful competitors work in another niche long ago, and nobody will let you go there.
The methods described in this article are quite universal and are used by businessmen around the world. In each case, additional measures may be required in order to maintain your business. Think tanks, hiring financial consults, and merging with companies with a reputation is a great idea to bring your company out of the crisis.