If you want to try and keep your business going when times are tough, then you are already taking the right steps to safeguard your company. Studies have shown that up to 20% of businesses fail in the first year. If you want to make sure that your company is not another statistic then there are a few things you can do to try and help yourself. Take a look below to find out more.
Focus on Cash Flow
The first thing you need to do is focus on cash flow as much as you can. You need to understand the cash you have coming in so you can make sure that you always have a good understanding of the money problems you may face later down the line. Now is a good time for you to focus on things like your tax bills, expenses that you may have to pay for later down the line, and your financial position in general. Economic challenges can bring about new problems for your business and it can also make it more difficult for you to pivot. If you can focus on cash flow however then this will give you much more leniency and it will also make it much easier for you to come out the other side stronger than ever.
Calculate Total Incomings
Next, you need to include your income as well as the sales you are making. You need to take note that it is only the cash that you have in the bank and you also need to make sure that it is relevant to the forecast you have. If you can, make sure that you take note of when the invoices are due rather than when you need to send them off. Add notes that relate to loan payment and also take the time to take note of any tax refund you may be due. You have to make sure that you are not always working from what you might have come in, and that instead you are working off what you know you have. If you can do this then you should always have an accurate idea of where you stand.
Calculate Cash Flow
The final step here is for you to calculate how much operational cash flow you have. Subtract your outgoings from your income and also make sure that you are always working from accurate numbers. You should be hoping to have enough spare cash left over so you can grow and invest in your business. If you don’t then you may find that you end up with negative cash flow which is the last thing you need. While a negative cash flow isn’t bad news for your business over the long term. It does however mean that you are spending more money than you should be. When you have finished your forecast, it is a good idea for you to figure out how accurate your initial predictions were. You can then spot any discrepancies and you can also edit your forecast if this is required so you can improve the accuracy by a great deal.
Assess your Assets
You need to consider selling any assets that you may have so you can give thought to your shortfalls. You may have some old equipment lying around and you may also need to look at excess stock too. If there is anything you don’t need then consider selling it so you can boost your assets. If you do have to invest in new assets then you should consider leasing instead. Leasing means that you don’t have to pay the full cost of the equipment right away and it also means that you can use the cash to your advantage. Moves like this help you to invest in the latest technology that might be out of your price range. As interest rates are typically fixed, you can also feel confident knowing that you can afford them moving forward. Remember that debt isn’t bad if you’re using it to grow, and if you are a debtor, you can use it to your advantage in more ways than one.
If you can do this while cutting costs where possible, then you will soon find that it is easier for you to keep your business afloat during tough times. Whether it is a tough economy or whether you are simply going through a tough time with your company, you have to make sure that you are always taking steps to move forward. You also need to monitor your cash flow and put away as much into a savings account as you can. By doing this, you can make sure that you are not putting your business at more risk.