No matter how the economy looks, there might be times when your business is either going through a financial slump or quickly headed towards one. In either case, having the right information and strategy can mean the difference between successfully bouncing back from the downturn and having to shut your business down for good.
Take Care of Your Taxes
No matter how dire your business’s financial situation might be, you want to make sure your taxes are fully taken care of. If you have any employees, ensure enough is deducted from their checks to cover their taxes. Should these taxes fail to be paid correctly according to the IRS or your state tax authorities, you can expect even more hardship headed your way.
Carefully Consider Your Future Purchases
If you plan on making a capital purchase in the future, it’s best you consider whether that purchase will increase your cash flow. Not only that, but you also want to make sure that cash flow is enough that you at least break even, which helps justify the purchase. If the projected cash flow is a paltry one, it might be better if you wait on buying.
Whittle Spending Down to the Bare Minimum
Extreme financial troubles could demand that you cut your spending. If you find yourself in this situation, reduce your costs to only the minimum you need to keep your business operating as usual. While you may be reluctant to take this step, you might be surprised at how well your business can still perform with just the basics.
Specifically, you’ll want to create a short-term financial strategy that includes all of the money owed to your business. Keep paying your regular business bills, and see if your vendors, suppliers and creditors would be willing to work out a deal where you can make your payments a little later.
Examine Your Business Performance and Financial Position
Take a look at your business investments. Are you getting a good return on them? If not, are you able to pinpoint why not? While you’re at it, you’ll also want to examine your non-business assets to see that they’re bringing in a maximum return. Depending on your circumstances, you might want to think about selling off assets that aren’t supplementing your cash flow. While making these changes could be difficult, you’ve got the survival of your business to think about.
Honesty Is the Best Business Policy
Desperate times call for equally desperate measures, right? Not if you don’t want those desperate times to deteriorate into felonious times. If you’re thinking of misrepresenting yourself or your business on a commercial loan application, know that receiving those ill-gotten gains could make you liable to your creditors.
It’s also a bad idea to transfer your commercial property to friends or family as a way to hide it from creditors. Creditors have experienced business owners who’ve attempted the same thing in the past, and you can bet they know how to track your property and transactions. So not only is your property likely to be found, you’re likely to face charges as well.
Look Into Small Business Administration (SBA) Guaranteed Loan Programs
There’s a chance you might be able to restructure your business debts over a longer period of time if the SBA offers a credit guarantee on your bank loan. Look into a Business and Industry Guaranteed Loan from the United States Department of Agriculture’s Rural Development Agency. Know that your chances of approval improve if your business is in a qualifying rural area. If not, you can still apply for technical and financial assistance from the state.
Consider the above tactics and options to get your business back on the right financial track. Rather than look at this as a time of failure, look at it instead as a time of opportunity.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.