Warning to all budding entrepreneurs!! Almost 75% of small businesses fail during their first year. This number goes even higher during financial or environmental crisis. During Great Recession of 2008-2009 number of businesses, large and small, failed because they were not in the best position to manage during the time of crisis. They either did not have sufficient financial cushion or failed to generate enough sales to meet their expenses. The key to succeed in the crisis is to prepare for it ahead of time and take decisive actions once the crisis does hit. This is the time not to panic, and you will not, if you have planned ahead. If you do run into financial turbulence here are 3 important steps you can take to navigate through the crisis.
- Streamline Operations
- Automate and Simplify
- Cut your Losses
The first thing you have to do during crisis is to cut cost to match the quickly declining sales. Only those businesses that can generate sufficient cash flow to meet expenses will be able to survive during this time. You have to look at your business processes and find inefficiencies. You need to put the systems in place to track and measure all aspects of your business. Only those items that get measured get improved. By tracking every step of the process you will be able to find the areas that can be improved leading to reduced cost and better service.
Once you have processes streamlined you will be able to take the next logical step of automating them. As business grows the processes inevitably become bloated and inefficiencies start to creep in. That is why it is important to take a step back and look at the big picture and find opportunities to simplify and automate the processes as much as possible. Automation helps you reduce costs because you need to hire less number of people. It also helps you improve service because there is less room for human error.
By looking carefully you will be able to find number of opportunities to automate in all areas of business. For example, if you rely on couriers to deliver items to and from your business premises, different business divisions may be using different vendors all requiring their own individual tracking systems. Instead of using multiple trackers, you can use a program which automates all of your trackers so that you can view and edit them from one simple, manageable system. This simplifies and lowers cost – just what you need in a crisis.
Finally, if all else fails and you do not see any way out you may have to take a hard decision to let it go. It is advisable to cut your losses early rather than wait till it’s too late. It is difficult to let go, but sometimes it is sensible to exit and start over again at a later time. Rectifying a crisis this way may appear drastic, but it may be a logical answer to a difficult problem you can’t really find a way around. Using a professional broker like Axis partnership will make it easier.
