No small business leader has had the same journey. Most successful ones, however, likely acquired the tools to become successful during a very similar experience. It’s the cornerstone of virtually every inspirational story, or what separates those who succeed from those who fail in all facets of life. The business is doing well and then, out of nowhere, something goes wrong at the worst possible time. No matter how much you try to anticipate risk and avoid dangerous situations, some crises are simply out of your control. It’s up to you, the business leader, to keep operations running and stabilize your finances. This is the aforementioned experience when you acquire the tools to become the very best at what you do. It’s all about how you get back up after you fall.
Fortunately, myriad businesses have managed to stay afloat amid the most tragic circumstances. These include industry-related challenges, economic turmoil, or personal tragedies like a car accident or serious illness. Though there is no universal solution, there are a few general pointers you can follow to guide you in the right direction.
1. Tighten Up Your Budget
Step one in your disaster recovery plan is to take a good look at your budget and tighten up in any available area. When you are strapped for cash, amounts as low as a couple hundred dollars should be treated like gold. You must therefore analyze every single recurring or upcoming expense your business has in order to determine which ones are nonessential or possibly nonessential. Examples of the former might include software programs that are rarely used or free snacks, while examples of the latter might include overtime pay or new computer monitors.
Expenses that are deemed nonessential should be eliminated right away. Those that fall into the “possibly nonessential” category can remain unless your financial situation worsens. Should this be the case, you can chip away at more expenses, beginning with the least questionable of the “possibly nonessential” category. Even cutting back on what seems like the smallest expenses will help because you are taking action, and the first step is often the hardest when faced with any sort of obstacle.
2. Do Not Dip Into Business Funding For Personal Bills
This mostly applies to the event of a personal tragedy, which tend to be absurdly expensive. It is tempting to dip into your business’s savings or operational funds to cover personal expenses. But unless your accountant gives you permission, even the most dire expenses – like medical bills – should not be covered by your business’s funds. Choosing to do so presents a host of risks, not to mention tax implications that could complicate your life even further.
The only time your accountant would give you permission to even think about doing this is if you have exhausted every other option imaginable. And there is usually a decent amount of options you probably haven’t thought of.
3. Choose A Business Lender That Is Willing To Negotiate
In times like these, any reason to be optimistic is treasured. Well, one thing that becomes a lot easier during a rough patch is the process of choosing the right business lender. You need a business lender that is willing to approve you in this state without assigning crippling terms. In other words, you need a business lender that is willing to negotiate, as opposed to traditional business lenders that couldn’t care less about the inevitability of your circumstances. At United Capital Source, we offer a number of small business loans that do not require strong cash flow or capitalization, like a merchant cash advance, revenue based business loan or business line of credit. You likely won’t need collateral or a personal guarantee, and we won’t expect you to make substantial payments in the first months after distribution.
We have also worked with many borrowers who unexpectedly stumbled upon a rough patch as they were paying off debt. As long as the borrower had been making payments on time thus far, we saw no issue with renegotiating their terms. We might be able to accept smaller payments over a longer time frame without significantly increasing the overall cost of the loan.
4. Don’t Be Afraid To Ask For Favors
One vital characteristic of a successful business leader is a lack of hesitancy to ask for favors. If you’ve been in business for several years, you have likely established a solid track record with at least a few business partners. They could include electric companies, vendors, marketing companies, credit card companies, or of course, business lenders. You might be able to get a lower rate on a bill or a credit extension. Some business leaders might be ashamed or embarrassed to ask for such things. These are probably the same people who aren’t aware of how helpful they’ve been to their business partners in the past, or how rare it is to find a reliable business partner in the first place.
Though there’s a good chance your business might never find itself in such dire straits, it never hurts to be prepared. One great way to do this is to work with a company like United Capital Source the next time you are shopping for an affordable small business loan. Establishing a relationship with an innovative business financing company will add this company to your list of lifeboats to turn to in the event of a crisis. Paying off a loan from UCS makes you eligible for rewards far beyond competitive interest rates and a dramatically shortened application process.