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No SME owner dreams of closing their business. However, unexpected expenses can strike hard and fast. The good news is that declaring bankruptcy is not the only option. Here’s how you can come up with an effective Plan B to save your company.
Is your SME in financial difficulty? Bankruptcy is not the only choice. Simple and effective solutions can help you regain control. Here are six essential steps to protect your business and come up with an effective Plan B.
First and foremost, take time to assess your situation even if the process is difficult. List your debts, receivable invoices, forecast revenues and fixed expenses. Use a simple chart or user-friendly software to visualize your reality. This overview will allow you to pinpoint urgent situations and actions to prioritize. The sooner you take action, the more options you will have.
In certain circumstances, creditors may prefer to get their money back over a longer period rather than losing it all if you close your doors. Contact them as soon as possible, explain the situation and propose a realistic plan. This could involve temporary payment reductions, deadline extensions or spreading payments out over several months. Acting fast and being honest in your communication can open doors you never thought existed.
Scrutinize your expenses. You may be paying for subscriptions you no longer use, exorbitant service contracts and oversized office space. Every dollar saved can strengthen your cash flow. Even if these savings appear minimal, their cumulative effect could give you a few extra weeks or months to regain your financial health.
Diversifying your income could shield you from market uncertainty. Launching a new service, offering promotional packages, targeting a neighbouring market or developing online sales are all ways to quickly generate additional income. In many cases, a small strategic pivot can relaunch operations and restore your clients’ trust.
When you’re experiencing financial difficulties, using your credit card or line of credit to cover expenses is tempting. However, you could make the situation worse if you don’t have a clear repayment strategy. Credit should be a temporary solution rather than your only lifeline. Debt + not having a plan = certain danger.
You don’t have to weather this storm alone. Business Recovery Advisors like those at Raymond Chabot can closely examine your situation, negotiate with your creditors and develop a tailored restructuring plan. Their expertise can turn a critical situation into an opportunity to start over on a solid financial footing. Don’t hesitate to contact us!
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