Crisis Alert: How To Stay Calm And Remain In Control When Your Business Is Going Down


 
You create it. You nurture it. You care for it. You pay close attention to its every need and do whatever you can to make sure these needs are taken care of. When it falls upon hard times, you fall upon hard times.

You, my friend, are the owner of a business.
 
With each passing day, we here at Accounting Solutions Ltd. are visited by a diverse assortment of business owners and entrepreneurs. They come from a variety of financial, cultural, and professional backgrounds. Their monetary incentives vary in size and scope, with some seeking advice on property tax, while others are looking to dive into the world of E-Commerce. Despite all of these variances- there is one thing that they have in common: they care about their businesses.
 
This passion and dedication towards one’s livelihood is admirable, to say the least. Unfortunately, in the deeply competitive realm of today’s market, not every business is destined to survive. Even when backed by an unrelenting desire to succeed, too many enterprises are doomed to fall into obscurity and debt.
 
Fortunately, there is always hope. Through decades of experience, our talented CPAs have weathered the storm with many struggling small-to-medium-sized businesses, and have acquired an acute sense of when it is time to ring the alarm, as well as what can be done to prevent matters from getting worse.
 
From a monetary perspective, there are some glaring signs that your company is not doing well that any sensible business owner should be made aware of. While the saying does go ‘you have to spend money to make money’, always be conscientious of the ebbs and flows of your finances, as one dip too low may lead to bankruptcy.
 
Some common warning signs of a business in distress include:
• Increasing inability to return investor funds
• Decreased sales
• Fewer customers and/or the loss of one or more major clients
• Poor productivity and employee morale
 
As previously mentioned, the financial well-being of any fledgling business is likely to move in waves. Unless you are offering some sort of revolutionary product or are able to acquire enough capital in order to absolutely stun your competition, there is a good chance that your will have dips in your capital flows. This is to be expected. One important component of walking your enterprise through these phases revolves around understanding exactly why these events are occurring. While one poor quarter could simply be the result of investing in more staff, you have to have an explanation as to why the next has yielded no increased profit margins. All downturns should come with a reason behind them, and, if you cannot find one, there is a good chance that you are headed for financial arrears.
 
Once one becomes cognizant of these warning signs, it is time to take a step back, put down a firm foot, and attempt to make changes that will stabilize your business. In most cases, we do advocate transparency within any business model. If you are noticing that your financial state is not as healthy as it should be, it may be a good choice to advise your suppliers, bankers, and other stakeholders that you are taking steps to remedy the situation. Communication is important here, and, when practiced effectively, it will instil confidence within yourself and others who have invested their time and money into your enterprise.
 
Now comes the hard part – making decisions that will turn the situation around. As accounting ultimately acts as the foundation of most businesses, it is always a good idea to get granular with your expenditures; where exactly are your profits leaking? Are there certain areas where you can effectively trim the fat while still retaining the integrity of your organization?
 
In these times of need, there is one thing that we cannot stress the most – a facet of business management that has saved many struggling entrepreneurs – you have to have kept sound financial records. Without these records, you will find yourself blindly backtracking through receipts and logs, something that will inevitably take up valuable time and resources. If you find the need to hire a CPA in order to help resolve your financial struggles, they will almost certainly require this information in order to provide assistance. Although they may tend to reflect money that has been spent, these records are essentially a life vessel for any sinking business.
 
Even when the numbers are declining and hopes are beginning to dwindle, never lose sight of what drives your company in the first place. Faltering banks accounts should not translate into poor customer service or any dips in quality. This can certainly be a hard pill to swallow, even for the most adamant of workaholics. The demands of the market are what ultimately drive your capacity to operate on a professional level, and even the most significant monetary setbacks should not stop you from attempting to retain a portion of the market. Sometimes this may require further investment in terms of time and money, but these sacrifices may become necessary when the wheel begins to grind.
 
Keeping control of the situation when your business begins to falter is certainly no easy task. By ensuring that you keep accurate records while also closely monitoring the balance sheets, you can help predict exactly when a crisis is approaching. After that, retaining a message of transparency, while making the right calculations and necessary sacrifices, are the next steps required to alleviate your degrading situation. With some hard work, a little luck, and the backing of some talented CPAs, you can be back on your feet in no time.

Chris Amundson is President of Accounting Solutions Ltd. located in Chicago, Illinois

Chicago Accounting Firm & Tax Solutions for Small Businesses

Last updated on July 9, 2019
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