I’m in a hole, I don’t want to drag them here!

Dear Sunday,

Times are tough, my business has been on a downward spiral, it is painful seeing my life savings which I spent to set it up going down the drain. I’m helpless. I know a few other people going through this. How can I get on track again?

Dear Brian, 

You aren’t the only one experiencing turbulence, don’t panic. As Joshua K. Njenga, the Managing Director of Motivational Team Training Consultants Limited explains below, there are a few things you need to do differently to help you ride out the storm.

Jacqueline Mahugu

1. Accept the situation

Stop denying that your business is going through a rough patch. If revenues are dwindling, customers are not paying promptly, or you are struggling to pay your suppliers, it’s time to tighten your belt. Accepting that it is not business-as-usual will help you respond quickly and effectively.

2. Don’t lie to yourself that the problem will go away soon

A bad economy can take three to five years before swinging back to positive territory. Since you don’t know how long it will take, prepare for the long haul. Take measures that will ensure your business remains afloat for as long as necessary, and keep a close watch on economic trends so that you can know if things are getting better or worse -- and make the necessary adjustments.

3. Don’t close

Don’t quit. Businesses that stay afloat during hard times have a head start when the economy improves. In turbulent waters, the most important thing is to keep your head above water and keep swimming until you get to the shore. If you give up, you’ll drown, and that may probably be the end of your journey.

4. Learn from others

A bad economy affects everyone. Find out what others are doing to stay afloat, and see if you can borrow some of their strategies and incorporate them into your own business.

5. Keep accurate data

Track the performance, costs, and profitability of your business from day to day; and use this data to decide what you should continue doing and what you should stop. Which items are fast moving? Which ones are not selling? Which products have good margins?

6. Relocate

Rent is an expense that does not change whether your business is performing well or poorly. Unfortunately, many people are so attached to their business premises that they would not give them up without a fight.

Moving to a cheaper or smaller premises will help cut down on overheads and frees up some cash for your working capital. People who love what you do will not stop buying from you just because you have downgraded your premises.

If you are offering a service that does not require your customers to come to your premises, give up the office space and work from home.

7. Close some branches

If you have two or three shops, consider consolidating all your operations in one shop; but develop strategies for reaching out or delivering to the customers of the closed shops. Explain to customers why you have had to scale down and agree on how you can continue serving them.

8. Put your business online

Depending on the nature of your business, putting your business online can help you operate without the overheads associated with renting premises.
 

9. Protect your cash flow

It is the lifeblood of your business; and, without enough of it, your business will grind to a halt. Insist on cash-only, and, if you must give credit, it must be to creditworthy customers. Keep proper records and a close watch on your cash flow. This will enable you to respond quickly if there are problems. 

10. Don’t give credit to government institutions

This especially applies to county governments. They often don’t pay, or they take very long to do so, If you get that a large order from a government institution that will be paid in 90 days, consider the impact it will have on your business if it is not paid.

11. Diversify

Don’t put all your eggs in one basket. Selling a few products makes your business vulnerable. Introduce new products and get rid of the ones that are not in demand.

12. Cut down on salary expenses

Negotiate with your staff to accept pay cuts. Explain to them that it is a temporary measure meant to help you all navigate the hard times but assure them that their pay status will be restored when things get back to normal.

13. Lay off some staff

If you can’t pay them, don’t keep them; but try your best to help them transition peacefully to a life without a regular job.