Cash Flow Problems
Running a small business is no easy feat and especially so if you’re facing financial troubles.
Financial troubles can come about at any time during the operation of your business. Sometimes the problems are spurred by unexpected departures in your staffing while others may be the need for a product recall. It’s better safe than sorry when it comes to understanding your options with financial aid to keep the business afloat rather than trying to ignore the issues and eventually bleed out.
Problem #1: A check bounces
Not all businesses are going to be using accountants and programs to manage payroll. We’re all humans and we make mistakes. Perhaps you forgot you already deposited the weeks’ business income to the bank but had cut out a check to an employee for side-work. Uh-oh. Now the check bounced and you’re already into the weekend – that doesn’t look good.
Solution: This could be one of those cases where you need a payday loan alternative to get an advance and be able to pay out.
Problem #2: High overheads with tech
Tech is generally a solution to many problems but it can also be the cause if you go too overboard with trying to adopt and adapt everything that catches your eye. This is the “shiny object syndrome”; you end up spending money on new hardware, software, and training for strategies you won’t likely put into action. The investment into hardware/software may not have been necessary at this time if the current system does more than what it needs to get the job done.
Solution: Place your trust in the IT department (or individual); they’ll be the ones to understand when new hardware and software best suits your business needs. Also, STOP taking on new projects if you haven’t completed one already!
Problem #3: Outstanding invoices
You give a vendor or customer the benefit of the doubt and decide you’ll send an invoice rather than requiring the money up-front (some businesses simply operate like this). Well, if the individual doesn’t pay the invoice on time and you’re relying on that income to keep your business moving forward you’re suddenly in a bind.
Solution: Find the best method of digital payment processing and politely remind them (along with these other tips on getting invoices paid).
Problem #4: Overestimating futures
Business makes it really easy to get emotional because everyone likes to think they have the idea or product that’s going to make them big bucks. This over-inflation of the ego continues to happen even after a business is established – business owners may have this idea stuck in their minds that revenues will continue to grow and so they go out and spend money based on this over-estimated future prospect. Now the dream doesn’t come true and you’re stuck footing a bill for items you can’t really afford because it was all speculation.
Solution: Start understanding the analytics of your business and not just make decisions by simple reports. Go deeper to learn the value of your customers, competition, market penetration, website traffic, and outreach. Use cold, hard data to make the decisions rather than your gut.
Problem #5: Undervaluing
A common problem that leads to financial ruin is when a business chases the competition so it becomes a race to the bottom (in pricing). To keep customers, you figure you’ll need to reduce the price but over time you remove so much of the profit margin that everything else in your business takes a hit. This also happens the same way when you overwork employees; you undervalue their importance and eventually they’ll get fed up and leave.
Solution: Develop your unique selling proposition and branding so people are willing to pay more for your product because they know it’s valuable and you provide great customer service.
It would be great if any and all of the problems could be fixed with cash reserves but that’s not always the case depending on the many factors that make up your business.
The finances you pump into the business to keep it going will eventually be recouped if you spent it in a logical and analytical manner. You can patch a hole where the finances are leaking but do take time to understand the bigger issues but at least know that it’s not all bust at the first sign of trouble.
Have you experienced financial problems during your business operations? How did you solve them?