Both boom times and recessions come and go, and the toughest businesses weather the storms and come out at the other end fighting fit. SMEs are at great risk from financial hardship as the burdens of running your small company can sometimes be dramatic, and come without the financial buffers and safeguards that larger companies have more access to. However, there are ways to help ensure you stay afloat through your trickier periods. Here’s our quick guide to getting through.
Avoid Further Debt
In lean times, cash becomes your best friend. Avoid making purchases which require incurring debt to access, and limit all expenditure unless you are convinced it will lead to greater cash flow than it is costing you at this moment. If the item you are purchasing cannot effectively pay for itself in revenue earned, you should be deferring the purchase until a later date.
Review with Your Financier
Be honest and open with your financial advisor so they can help you weather the financial storm. Provide any information they request to avoid delaying guidance, which could be helpful in avoiding losses. If you have any direct concerns, write them down and share them with your advisor so they can give practical and tailored advice.
Budget, Budget, Budget
It is highly likely you already stick to a business budget, but this is the time to keep your budgeting ethos as rigid as possible. As the owner of an SME, ensure you apply the same principles to your personal accounts to avoid draining them to cover business expenses. Your own financial stability is closely tied to your company, so recognise this link and budget accordingly.
Deal with Problems Swiftly
It can be tempting to run from taking a long, hard look at your finances during times of hardship. However, dealing with problems as they arise, having sought the correct guidance where applicable, ensures debts don’t spiral out of control. Be cautious in your future spending and cut anything unnecessary, but remain culpable and professional when it comes to honouring necessary existing commitments.
Keep a Clear Head
Try not to panic. Worrying cause you to make poor business choices and the impact of those will last far longer than your current crisis. If you need to, take the weekend off and give yourself time to adjust to troubling financial times – you’ll return refreshed and ready to fight on.