The financial crisis is a nightmare for every businessman. The causes are various, it can be due to internal factors such as poor cash flow management, or external factors such as a weakening economy, calamities such as natural disasters or disease, and so on. If the entrepreneur does not immediately take action when the financial crisis hits, his business’s financial condition will get worse and then end up in bankruptcy. Before the condition gets worse, there are several steps that need to be taken by entrepreneurs.
Identification of the Causes of the Financial Crisis
The first step to dealing with a financial crisis is to identify the main problem that caused it. The cause can be internal factors or external factors. Financial problems are generally an indication of a bigger problem. Therefore, a permanent or long-term solution is needed to overcome this financial problem.
If your business’s financial crisis is caused by external factors such as the Covid-19 pandemic which is still happening at this time, for example, it is important to understand that your business financial problems may improve after the pandemic ends. And, if you are a micro, small, and medium-sized business actor, you can ask for help from the government through the people’s business credit programIt is feared that the Corona virus will cause a global financial crisis.
However, if the financial crisis has hit even before the Corona virus pandemic occurs, and if you are not a perpetrator, then there is more effort that needs to be mobilized to restore financial stability to your business.
It is also important for you to analyze the financial management of your business. Have you been mixing business finances with your personal finances? How have you used your business income so far? Do you always receive customer payments on time? Answering these questions will make it easier for you to evaluate how to manage your company’s finances and find out what is effective and what is not.
Eliminate Unnecessary Costs
You also need to analyze the expenses of your business expenses. From here you can find out where and how you can save. Find out which business processes are costing the most. There may be ways to cut or reduce these costs. Establish good communication with your supplier and ask if there are ways you can get a discounted price or lower shipping costs (for example, a bigger down payment).
Cut down on manual processes that take a lot of time but don’t give your business a profit. For example, you have spent a lot of time and money doing accounting tasks such as creating paper-heavy financial reports and invoices. Maybe it’s time to switch to a digital accounting system so that management accounting costs can be minimized.
You also need to be more careful in making purchasing decisions. Maybe you’ve been spending a lot of money on unnecessary purchases. Purchase requests from each department or business unit should be further reviewed. To make it easier for you to process your approval, you should use procurement software that can be integrated with other business processes such as accounting or inventory management.
Manage Your Budget More Thoroughly
Budget management must also be tightened. Now you have to really allocate the budget you have on things that provide many benefits to your business. Postpone plans to expand your business, hold large events, or other things that require large capital.
To make it easier for you to manage your company budget, use a financial application that is integrated with purchase management. With this system, the approval matrix can be adjusted so that budget requests from each department or business branch can be managed better.
Change Sales Strategy
You need to evaluate your sales strategy so far to find out whether it is working or not. This way, you will understand what needs to be fixed or changed. Review your promotions. Are you really making a profit or is your promotion program actually making you lose?
Evaluate your prospect’s quality again. Have you been spending a lot of time and money on prospects who didn’t meet your expectations? Now is the time for you to focus and focus your priorities on higher quality prospects so that the sales conversion process can be accelerated and waste can be avoided.
You may also need to replace your marketing strategy with a more efficient one, for example, during this time you spent a lot of money on advertising on billboards, now might be the time to focus more on digital marketing.
Monitor Your Business Cash Flow
No less important is monitoring your cash flow regularly. This will help you understand your business income and expenses in detail. From here, you’ll be able to figure out your profit and loss, what’s holding back your cash flow, and what costs you could cut.
Your cash flow can be monitored anytime and anywhere in real time with the help of web-based financial applications. This application also allows you to track the income and loss of each department and business unit and generate various financial reports in seconds.
Also make sure you manage customer bills properly. Bills that are often paid late is one of the factors that worsens your cash flow.