With the pandemic having gone on for over a year now, it’s far from uncommon for businesses to be struggling after more than 12 months of lockdown measures.
If you are unfortunate to be this position, you may be curious as how to respond when your company is at risk of closure. And while it is naturally not possible for all businesses to be saved in a recession as severe as this, there is plenty you can do to maximise your chances of survival. It’s also important that you work to minimise your own losses if it turns out your business must ultimately close down. Read on for a few more things to consider when your business is struggling.
Assessing Your Business
It is difficult to formulate a plan as to how you should manage your business if you don’t have an accurate overview of your company’s finances. The first thing you should do then is conduct a thorough fiscal evaluation of your business. You can use existing financial staff to do this, or alternately hire external financial advisors for a more thorough analysis. The results of this evaluation will then dictate the next steps you should take. You will be surprised at how much this information can be in directing what you should do next. If your company is currently operating at a loss, for example, you can work out at what stage the business will fold. It can also be used to find areas of spending which can be cut in order to help ensure the survival of a company, and to see what funding you might need to revive your business.
Adapting
A financial analysis may help illuminate the most and least profitable areas of your business. It is thus important you are also flexible in changing and updating your business model in line with current trends, and what is profitable. Modern technology and increased competition have made many markets fiercer than ever, so it’s crucial that companies are adaptable in their approach to maintain a competitive advantage. If something is not working then, you will know something needs to change.
It is unpleasant but necessary to also adapt to the financial circumstances of your company. For example, it is pointless to retain costly office space or unnecessary members of staff if it means it will eventually bankrupt your company. Reducing unnecessary expenditure will help you survive during this economic slump until you can grow the company again.
Considering Liquation
If your debts are becoming unmanageable and your expenses are mounting, you may decide there is nothing left to do but shut your business. This is a difficult decision for anyone to make, but you still must be proactive even if this is the route you decide on. Liquidating your company involves turning over your assets to your creditors, and it being permanently closed. This can be beneficial as it will settle most if not all of your outstanding debts, and doing so voluntarily will prevent you from being in violation of any laws pertaining to your unpaid debts. It can thus be a good idea to take this step prior to it being mandated legally. It does mean that you will be permanently prohibited from trading under this company though, so it is not a decision to be taken lightly.
