If your business is failing, then you need to make some tough decisions. You also need to make sure that you get yourself out of trouble as soon as possible because if you don’t then you may find that your personal life might be affected too.
You have to make sure that the price you receive for your product or even service is beyond what it costs you to deliver. This can be difficult if you price all of your customers differently, but if you take your time and go through all of your numbers then there is no reason why you shouldn’t be able to find out this information. If you do find that your variable contribution is lower, then this could be the source of your problems. When calculating your numbers, it’s important that you take into account any smaller expenses that you need to cover in order to deliver your product or service. If you drive to your customer’s location for example then you’d need to include the cost of fuel, the employee’s hourly wage, the cost of maintaining the vehicle and more.
Cut as Many Costs as You Can
If you want to stay in business, then there’s a high chance that you’ll need to significantly reduce your expenses. This could include travel costs or even utility bills. Letting people go may also be an option, and although this can be difficult, it’s better to lose a few employees than it is for you to shut down your entire company.
If you owe a lot of money then you have to make sure that you prioritise what you need to pay. One way for you to help yourself here would be for you to organise your payments into three different categories. The first is any obligations that you need to pay in order to stop your business from shutting down, for example, your employees and vendors. The second category should be for expenses that, if you don’t pay, will result in a large penalty. Lastly, the third category should be for anything that does need paying, but not immediately.
When you have prioritised your payments, you then need to assess the cash that you have and the money that you expect to collect. This will help you to build a suitable and sustainable cash flow plan that will help you to get back on top. You need to be strategic with your investments here, by making decisions that will benefit your business in the long-term, for example, by trying to find more details about IT support services or even trying to enhance your sales funnel. When you get to this point, you will be dealing with a lot of risk but if you are able to follow the above tips then there’s no reason why you can’t significantly reduce the amount of debt that you are in and you may even be able to save your failing company at the same time.