No matter what a company’s size or past performance, there is no guarantee of avoiding financial disaster. There are, however, proactive measures you can take to be aware of issues and address them head on to decrease your likelihood of financial ruin. Being objective about your situation, utilizing strategic planning and seeking assistance can make an impact on the ultimate success of a business. Follow these steps if your business is facing financial problems.
Be Realistic
Recognizing the signs of problems within your own company can be very difficult for a leader. It’s hard to be objective about a situation you are currently living, especially if there are emotional investments involved. It’s imperative that you take a periodic step back to assess your situation with objective eyes. Look for possible signs of distress such as declining cash flow, falling stock prices, regulatory inquiries or unexplained staff turnover. Consult with a trusted adviser if you feel you may be unable to detect issues on your own.
Address the Issues
Once you become aware of the state of your company’s finances,it’s crucial that you act on the knowledge you’ve gained. Take action immediately to formulate a strategic plan to deal with things in the best way possible. While not every problem can be overcome, there are likely steps you can take to improve your situation and to begin moving in a more positive direction.
Involve Key Stakeholders
In order to develop effective strategies, you will need the input of your team and, possibly, of outside consultants. This is not the time to attempt to clean up a mess on your own. Overcoming financial obstacles will require that those in a position of leadership or influence work together and are on the same page. A concerted effort is an effective way to make things happen. Don’t forget to include your board members in the talks. It is their responsibility to work toward preventing events that can negatively affect the company, and they should be invested in working to solve existing problems.
Consider Making Cuts
While now is the time to embrace relations with those who can most benefit the organization, the harsh reality may be that it is also the time to consider cutting the relationships that are no longer needed or are not serving your business well. Vendors and suppliers may be some of the first ties to relinquish. Think about which services you can do without in order to cut costs or to utilize your resources more wisely. A more difficult consideration is whether there are employees whose positions are not currently necessary. Sometimes it may be that someone isn’t carrying sufficient weight or it may simply be that the position is a redundant one. These choices are never easy, but they are often necessary.
Evaluate Your Options
Sometimes you reach the brink of simply finding ways to buy yourself time in an attempt to raise funds. Assess your options regarding ways to do this. Perhaps liquidating costly assets will help to bring in some cash flow. Despite your current state, a loan may be a possibility and could be worth investigating. Before you take that step, it’s best to consult experts as to the whether doing so will help your specific situation or whether you’ll only be digging yourself in further. Finally, decide whether bankruptcy, reorganization or some other such action may be required. Legal experts well-versed in the restructuring of corporations, such as Suzzanne Uhland, can provide information to guide the options of corporate leaders.
No one wants to find themselves in this situation. However, making the effort to address issues and to look at all possible solutions with the help of your stakeholders may put you on the path to financial success once again.