A crisis is not an average problem. Crisis aversion is not always possible, no matter how cautiously you proceed. But being caught off guard can add to the intensity of the devastation of the crisis. Not everyone can visualize all the ways things can go wrong.
Visualization can be in the context of assuming all the cons of a new business venture or a simple change in strategies. It is usually people who are immensely immersed in their plans who cannot spot the catastrophe that might follow.
In hindsight, it could have been a simple tweak that might have saved their venture/plan. Nonetheless, if you cannot avoid a crisis, brace yourselves.
Tackling a crisis
Firstly, do not be overwhelmed in these dark times, as these are the times where you need to keep your calm. Planning how to tackle a crisis comes next. It is necessary to think of a thorough plan to hold your company in place and recover from the crisis. It’s time for those emergency funds to come into play.
Assessing the situation and take up a plan to minimize the damage while steadily recover from the crisis. Make sure to consult professional lenders who know about the crisis and inform them about your action plan. You should make sure that the crisis does not distract your whole company. Select a few employees and team them up to tackle the situation.
If your emergency funds seem to fall short for the duration your action plan will take to help your business recover from the crisis, you should make sure there is a steady cashflow available to avoid going bankrupt.
Here are a few tips on managing your cash flow :
Adjust your business plan according to the situation
Suppose a certain area of your business suffers from recession. Consulting your business and financial advisors, develop a plan to switch focus on another sector of your business with more scope for profit. It’s all about improvising.
Like when the covid epidemic struck, breweries were going out of business, but they improvised and switched to manufacturing hand sanitizers. They had surplus high-proof ethanol, the main ingredient in sanitizers. Adapting to the conditions as the demand for hand-sanitizers had skyrocketed.
Consider borrowing money
If your business is suffering a shortage of funds to invest in another sector, consider taking a business loan. It is necessary to have a plan, know what amount you need, and the probability of succeeding in your new venture. While borrowing money, be sure to consider various loan providers and take up the least interest along with the best repayment plan suitable for you to ensure you are not burdened further.
An equity sale
When facing a financial crisis, selling common shares of the company can be a good way to recover funds. It is better than selling your company’s assets as the company can operate in the same way as it did before. Be careful in who to sell the shares to, avoid making poor decisions for your company’s future.
Sell non-essential assets
If selling shares of your company does not meet the requirement of the funds required to invest in another sector beneficial to the current situation, sell the company’s non-essential assets to raise money. This strategy can prove useful in times of dire need of funds.
Cut down on expenditure and try to delay payments
Removing unnecessary expenditure can save your company a lot of money. Prioritize your company’s expenses and spend only on costs that generate revenue.
Also, try to delay payments to your vendors. Although it might not be possible for every utility provider, some loyal vendors might agree to help you during difficult times.
Conclusion: You may never know when a crisis pops up. It is important not to lose your cool and formulate a business plan to tackle the situation. The most important thing is to keep your company’s income flowing. Mentioned above are a few ways on how to manage monetary funds during a crisis period.