5 common operational obstacles and tips on how to overcome them.
How you run your business directly correlates to the success of your business. Overspending, taking on too many tasks at once and other missteps can wreak havoc on a company’s day-to-day operations, but many concerns can be resolved by addressing them head-on.
If any of the following statements sound familiar, the suggestions below may help you turn your company’s situation around — and get your business back in the black:
- Situation: “I can barely keep this business afloat.” You’re probably mentally and physically exhausted, working nonstop, but not earning enough money. You may find yourself dodging creditor calls and wondering how you’ll fund your company’s next payroll.
Tip: Be realistic about your company’s situation.
- Seeing little to no revenue after making significant changes, leaning too heavily on external funding and feeling burned out can all be signs your business isn’t making it, according to Inc. At that point, it’s time to decide whether you want to try to revamp how your business works — or disband operations.
- If you want to revamp, identify the root cause of your problem, and get some help by looking to those both within and outside your business for their expertise.
Tip: Stay on top of reviewing your financials.
- Knowing how your company produces a profit is crucial, so set aside time to review your margins regularly.
- To get started, check out the Houston Chronicle’s guide to figure out which activities are most profitable to your small business and which offer low returns/ROI.
Tip: Don’t try to do everything yourself.
- There are some tasks that business owners should never delegate, such as making decisions that will impact your entire company. But for other things, you can (and should) depend on employees and business partners to handle tasks that are their responsibility.
- Have issues your staff can’t handle? Consider hiring a professional consultant. For tips on successfully managing a consultant, check out Fast Company’s The Real Reason to Hire a Consultant article.
Tip: Prioritize spending and examine your assets.
- To conserve cash, prioritize your spending to take care of critical operation-related obligations first, such as payroll, rent and related taxes.
- Also examine your company’s assets. Can you sell some items you aren’t currently using — or sell and lease back key assets that are tying up working capital? If you’re sitting on extra inventory, try to get suppliers to take it back. Or, you could attempt to sell some of your slow-moving inventory at a discount to increase your amount of available cash.
- If need be, you can look into loan and financing options, such as those offered by the Canada Small Business Financing Program through Industry Canada.
Tip: Realize that you may need more than just cash to fund your business’s start or growth.
- If you’re already experiencing debt-related cash-flow problems, try to restructure your operating debt and obtain a term loan that you’ll pay over a set time period to free up working capital.
- See if your bank would accept interest-only payments until you’ve made significant changes.
- If you know you’re about to miss a rent, loan or other payment, let your business partners know.
- Offer key suppliers a partial payment in exchange for a shipment of additional goods or a note for past-due invoices repayable over an extended period. Consider offering suppliers a small amount of interest in your company in exchange for debt forgiveness.
Once you’ve identified what your company’s main issues are, create a business plan to deal with any problems and get operations back on track. Include ways to measure the success of your actions over a short time period — and, to prevent any potential roadblocks or delays, share your plan with key business associates before implementing it. Getting them on board can help ensure your plan’s success.