Businesses across America and around the world run into financial trouble every day but the way in which company directors cope with the resulting pressures can make a real difference to how things turn out.
Here are 5 action points to focus on and have in mind if your company is facing serious financial difficulties.
1 – Take a deep breath
Both literally and metaphorically, taking a deep breath can help a company boss to figure out what the best route forward is at a particular juncture. When things aren’t going as smoothly as you’d hoped or your business is dealing with a serious financial problem then taking a step back and looking at the situation from a broader perspective can be enormously useful.
2 – Gather your key stakeholders
It is vital in a situation of financial distress for a business that the men and women in charge or who have a stake in the company come together and understand what the real problems are within the business. The reality might be hard to accept or face up to but hiding the facts or pretending that everything it rosy in the garden generally only serves to worsen the prospects for a company in trouble.
3 – Come up with a plan
As a company director, you need the backing of your stakeholders as much as possible during times of real financial crisis and you should be aiming to establish support for a clear plan of action that stands a chance of turning things around. Even if the plan involves taking tough decisions, it is better that they be taken while there are still choices available and while your business remains viable and has a chance of returning to health and sustainability.
4 – Focus on what matters most
In a situation whereby your company is dealing with a serious squeeze on cash flows and its future is threatened, it is time to focus firmly on the core aspects of your operation and the ways in which you stand the best chance of delivering revenues and profits. This prioritization may or may not lead to a scenario in which you need to liquidate and raise cash from non-essential parts of your business.
5 – End non-essential relationships
Liquidating elements of your business in the interest of recovering from a financially unsustainable position can be tough for directors in any industry and so too can ending employee or supplier relationships. This is particular true if those relationships have been long-standing and important to the running of your company for a sustained period but these tough options just have to be taken if you want to give your organisation the best possible chance of moving towards a brighter future.
The difference between staying in business and going bust often comes down to the actions of a relatively small number of people and the pressures involved can be extremely testing and stressful. However, with the right approach, strategy and support, there is often a lot that can be done to turn around ailing companies even when the future seems entirely bleak and unpredictable.
Conrad Ford is the founder of Funding Options, which provides a range of online tools to help firms and their trusted advisers to manage funding and cash flow.
