Running a business, be it a startup or small-to-medium-sized company, is no mean feat as you’ll undoubtedly have to deal with financial setbacks from time to time. This is a nightmare that every business owner wishes not to have to encounter at all.
However, financial losses in business are impossible to avoid, so you shouldn’t lose hope straight away whenever they happen. Instead, you need to implement specific business strategies that can help you bounce back and recover from your financial losses.
With that said, many business owners are usually stuck wondering how best to recover from business loss. If you’re in a similar situation, here’s a guide on the practical business strategies to employ when looking to recover from a financial loss:
1) Identify What Caused The Financial Loss
You need to take time to reflect on the mistakes that led to business losses, despite this sounding counterproductive. Doing this is necessary as it’s the only way you’ll gain insights into what led to the business loss. As a result, your efforts to try and recover from the financial losses won’t be futile. The cause can either be an external or internal factor and identifying it will help you apply long-term measures to avoid such a problem in the future.
Examples of internal factors that result in financial loss include being involved in a legal battle with another company, or conflict among the employees. Poor financial management, such as not properly using the profits, and mixing your business and personal finances, can also lead to financial loss.
External factors that can cause you to suffer financial loss, for instance, can be economic instability caused by government instability, or a pandemic. If you need expert help you assess the precise cause of financial loss, visit Michigan CFO Associates to get the required assistance.
2) Understand Your Business Cash Flow
Not having an excellent grasp of your company’s cash flow is possibly one of the main reasons why you suffered financial loss in the first place. After all, cash flow is a business’s lifeblood and plays a vital role in ensuring the smooth running of your company. Therefore, you should take your time to try and understand your company’s cash flow. This way, you’ll have a clear picture of your business expenses and income.
Fortunately, cash flow management today shouldn’t be too hard, thanks to financial solutions that help manage customer invoices by making it easier and quicker for you to get paid.
Therefore, you don’t have to deal with issues of delayed payment, which causes poor cash flow. In addition, you need to be proactive and make sure your clients always pay the expected sum of money on time and entirely. Using a web-based accounting app, you can also effectively monitor your cash flow from anywhere and anytime.
3) Assess The Financial Damage
You also need to take your time and assess the extent of your company’s financial loss. Doing this will help you map out what’s the best financial recovery path to take. The best place to start is by taking a look at your financial statement figures such as the cash flow as well as profit and loss reports.
Consequently, compare this financial information with previous years to better understand the financial implication.
Once you’ve got a clear picture of the financial damage, you’ll know the best steps to help your business recover from the loss.
4) Alter Your Sales Strategies
Your sales strategies directly impact how well you can reach your potential customers and get them to make a purchase. And after suffering from business financial loss, you need to closely examine your sales strategies to identify whether they’re effective or not. Consequently, you’ll know whether to alter or refine your sales strategy and help generate greater revenue for your business.
One effective sales strategy you should implement to help your ailing business is by creating an online store. Such a move, especially in today’s internet age, will help your customers buy your goods while in the comfort of their homes. And with most people still wary about COVID-19, this would endear many of your existing and potential customers leading to increased sales.
5) Prioritize Customer Service
The phrase the customer is always right, despite being a common cliché, has some truth in it. After all, without your customers, your business would cease to exist. Therefore, you should take your time and build solid relationships with your clients. You can do this by either reaching out to them via social media platforms or properly marketing yourself. In addition, you should always quickly respond to any concerns your customers might have regarding your products or services.
Making customer service a priority helps you build a positive brand. As a result, your existing clients will promote your business to other potential customers, and this further increases your company’s revenue. This will help your business recover from the financial loss suffered.
6) Find Multiple Revenue Sources
Most businesses solely depend on one product, and it’s such a narrow focus that’s often the cause of why they suffer from financial losses. Such a business strategy isn’t advisable, especially today due to the increased prevalence of economic uncertainty. Instead, it’s best to have numerous revenue streams by increasing the number of products you’re selling. This will ensure your success in the highly competitive marketplace.
Increasing your number of revenue streams doesn’t only mean having a greater number of products to offer. It also means creating a passive income stream, marketing to different clients, and marketing through different platforms. Ideas of possible revenue streams you can include in your product line are:
- Complementary products, for instance, tools needed when using your primary product.
- Installation and maintenance services that simplify how your customers use your products.
- Consulting services targeted at customers using your products.
- Videos uploaded on social media, that primarily focus on your employees or brand, and step-by-step guides to follow when using your product.
With these numerous income streams, you’re far less likely to suffer from economic loss. For example, your company won’t suffer significant financial loss if you have five income streams when you’re entirely dependent on one revenue source.
In your entrepreneurial journey, suffering from financial loss must happen to you as a business owner. However, such financial setbacks shouldn’t demotivate you from being determined to attain your business goals.
Instead, you should work harder and reinvent yourself by employing the business strategies discussed above that’ll help your company recover from financial loss. Subsequently, your business will become a lot more financially stable and resilient.