Fix Businesses

Step By Step Strategy To Fix Your Business

Many businesses fail each year, but it does not mean you have to be one of them. Regardless of your circumstances, a failing company can be fixed. 

Does this sound like your business:

• You cannot make monthly repayments of the large debts you have amassed
• Your unable to pay your tax bill
• You have large outstanding payables, and unwilling to pick up the phone when someone rings in case its someone chasing to be paid
• You are running out of cash, and little chance of external financing
• Sales have been declining
• Bankers are performing a review of your business, due to worrying concerns about the industry
• A major customer is unable to pay for the work you have completed
• You have lost a major customer to a competitor
• Your debt covenants will soon be violated or it is already violated
• Costs are out of control

Step 1: Stop the bleeding 

Before doing anything else, you must stop the bleeding. Getting to break even should take six months or less. Forget about the grand plan, or the new product that will get you out of your current problems. The negative cashflow must first stop.

Step 2: Forecast Cash 

Prepare a 13 week cashflow, and update weekly to forecast when money is coming in and when money is going out. 

Step 3: Find cost savings 

You must identify every single line in your expenses, and find savings. This can be a great time to restructure your debt, and lay off underperformers 

Step 4: Escalate your collection procedures 

If the staff member in receivables does not have the ability to collect debt. You must get someone else to do it, or do it yourself. Remember its your money, and its better in your bank account than in someone elses bank account. Don’t let customers treat you like a bank. 

Step 5: Sell your receivables 

Receivables are an asset that finance companies will lend against. It may seem expensive at first, ie between 2% to 5% on the value of the invoice, but remember you would probably give your customer a 5% to 10% discount if they paid upfront. Therefore it is not that expensive after all if you look at it this way. 

Step 6: Sell unproductive assets 

There may be company cars that are no longer required because you have terminated staff and not replace, or there may be a loss making division or product lines that may be desirable for a competitor. 

Step 7: Make what sells 

Business that sell what they can make, will eventually die, but business that make what they can sell, has the formulae for success 

Step 8: Increase your prices

Review your product or service lines. Increase your prices by 5% to 10%. This increase will flow directly to your bottom line.

Step 9: Specialise or die

There may be company cars that are no longer required because you have terminated staff and not replace, or there may be a loss making division or product lines that may be desirable for a competitor. 

Step 10: Create a digital marketing strategy

The advent of the internet has changed the way business is done and how customers prefer to interact. This is an important factor in any business, especially if you are in the retail sector