A person starting a commercial venture dreams of success but the road to it is paved with many obstacles and there comes a time when an owner finds himself beset by financial problems. Strong will and determination are needed to successfully recover from such a scenario but what is required more are some practical business tips that one can use to stay afloat and hopefully ride out the crisis.
Let’s have a look at some of them.
Assessment and Planning
Making a complete and honest appraisal of your current situation will first and foremost aid you in deciding whether any recovery is still possible or do you need to terminate operations. In case, the scenario is not so grim a thorough analysis of the balance sheet will reveal the complete picture including details about payables and receivable accounts and what are the chances of generating some money in the present condition.
Taking professional help, though it means incurring additional costs, makes good sense as it will ensure good returns by documenting a roadmap for the future.
Start focussing on the liquid capital available and where it needs to be used and make an evaluation of all your purchases analyzing whether they will create enough profit that can be converted into cash in the future or not. Eliminating such buys and checking whether enough money is there for immediate payments like utility bills along with deferring remittances which are possible to do so gives you an idea of your resources as well as some time to make things right.
Managing hard currency also saves one from further unpleasant surprises as one is aware of the assets at hand which makes decisions about future procurements easy to make.
The genesis of the problems being faced by an institution sometimes lies in the manner it was being run and it is always wise to therefore change the older ways in order to rectify things. A most important aspect which at times is not addressed creatively is the balance between long-term and short-term debt of a company.
One can always extend the period of a short term loan to increase the liquid asset availability but such an action depends on a few dynamics like the debtors expected cash-flow, the creditor’s readiness to make the adjustment and crucially the relationship between the two parties. A lender also stands to gain from the process and generally they provide borrowers with either extra time or lower interest rates in order to enable them to clear their liability.
Being honest with the bank about the current situation and sharing with them the assessment report prepared as mentioned in the first point will increase your dependability factor and both sides may move towards a mutually beneficial solution.
Control your spending by employing money saving measures like retaining only the staff essential for the functioning of operations and by using innovative techniques like renting a co-working space instead of a separate office building.
Further, incorporate some changes in your lifestyle like letting go of that fancy car. Such measures seem insignificant but while preserving capital they also make you look responsible and dedicated towards the cause of resurrecting your venture.
The most vital of all the business tips listed here and crucial for the future of the promoter as non payments of tax can be considered a criminal offence and can be potentially damaging to the stature of the individual. Maintaining all records diligently and referring to them periodically will keep you aware of the situation beforehand enabling you to take required steps.
If completely unable to pay the dues, instead of evading the authorities one must cooperate with them and take advice from institutions like dispute resolution law firms which specialize in such issues and can get you out of the mess.
Reviewing Insurance Coverage
All enterprises take out various insurance policies depending on the risks and hazards they face but during hardship one can end coverage on low-risk or unnecessary items thus saving money. Many life covers come with a provision of taking loans against them, the amount of which depends upon the percentage of surrender value and the interest rate on the number of premiums and their total amount paid.
A choice can be made of paying only the interest part while the principal can be deducted from the claim fund at the time of settlement.
Negotiating financial difficulties can be stressful for an owner but clear thinking, honesty and detailed planning as pointed out by the above mentioned business tips will definitely help in achieving a better and positive result.
This is a Guest Post from Amy Jones. She is a professional legal expert working with Ahlawat & Associates. A company that provide intellectual property lawyers in a convenient manner. She is a passionate writer and loves to share about business related tips.