Business Credit
3 business scenarios that need money to make money
In life and business, crises are inevitable. And we're not just talking about natural disasters. A crisis can be anything that disrupts regular business operations. Think: losing your top salesperson, experiencing a data breach, or dealing with a burst pipe.
Here are other examples of common business crises:
Any one of these crises has the potential to put multiple areas of your business at risk, including daily operations, customer relationships, and finances. That's why it's crucial to develop a smart response plan and take advantage of the right resources for overcoming a business crisis and help reduce the damage.
When you're trying to resolve a business crisis, you need to take a multi-pronged approach. Not only do you have to address the fallout from the crisis and figure out how to return operations to normal, but you also have to explore the root issue to prevent a similar crisis from occurring in the future.
Here are three key steps to take when oveercoming a business crisis:
In the midst of chaos, you may feel tempted to jump into problem-solving mode, but it's important to assess the situation and evaluate your options for moving forward. Instead of creating a plan by yourself, though, bring in help. Consult a couple of experts who can help you overcome a business crisis by looking at the situation from different angles.
If you're dealing with a lawsuit, for example, you need to call your attorney. If you're facing a cash flow shortage following a big project, it's a good idea to check in with your accountant. You may even want to reach out to your business mentor or a colleague who has dealt with a similar crisis. Gathering a few trusted opinions is key to making a plan that covers all your bases.
After you assess the damage from the crisis, it's time to create a response plan. A good plan should address the fallout, as well as the root cause of the crisis. Imagine, for example, that your number one client unexpectedly ends their contract with you, setting you up for a massive cash flow shortage. To recover from the loss as quickly as possible, you need to give different team members different tasks.
Someone should reach out to the client directly to ask what went wrong, apologize, and try to address the issue. Another person should connect with other clients and try to drum up new business. Finally, someone else should be in charge of reviewing company finances to ensure you have enough cash to cover payroll, utilities, and other operational expenses in the interim.
Make sure to build flexibility into your plan, too. Every couple of days, take time to evaluate your efforts to see which strategies are working and where you may need to rethink your approach.
Different business crises demand different response plans, but every crisis requires at least some money. That's because crises tend to hit your finances the hardest and fastest. In the wake of a crisis, it's critical to review your business finances with your accountant to see whether or not you have enough money to handle the issue.
If you don't, you may need to explore other options, like re-shuffling accounts payable, promoting a sale, liquidating an asset, or applying for a business loan. An online term loan can help bridge the gap in cash flow to keep your business going.
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