The reality of business life is that we not only have to accept that things can and will go wrong, but we also have a responsibility to our business to ensure we can right our wrongs and fight for a better future. If things go wrong, we need to be able to bounce back, think on our feet and find a winning solution. Nine times out of ten, this will be the way forward and it will be clear, however, with some business issues, the answer to getting out of a hole isn’t always right in front of you.
When it comes to money in a business, it can mean life or death, so when your business isn’t making money, it can be a huge worry – as a business that doesn’t make money (unless it’s on a mad loss-leader type gamble) won’t usually last for long. It’s easy to panic when we see how our finances look at the end of the financial year, but that’s one thing we mustn’t do. If your business is not making money, unfortunately, you cannot waste time by worrying. Your actions are needed, and they must be decisive.
How do you find out you’re losing cash? Well, ideally you will be the person who knows! You need to keep a close eye on your budget, and you need to stay in control at all times. Remember that like physics, every action in business has an equal or opposite reaction. If you spend money, it is going to come from somewhere, and it will not be replaced. Keep a close eye on your budget and make sure that if you spend money, you can back it up. Mindless spend and an ignorance of your budget are a route to disaster in business.
So how does a business get into a position where it is making losses? It could be for a lot of different reasons. In mostly all circumstances, it will be to do with your budget and how much you are spending. Overspending is how you will strangle your business with your own two hands. Remember that your budget is your bible and you should not disagree or disobey it. Stick to its confines. If you don’t, you can encounter issues like wasting stock and overhiring, which can drag you into a financial hole. If you want to avoid making losses, or fix your business, so it starts breaking even, you need to look within your business at first, and see what you can do to fix things and turn the ship around.
Your business might not be making money because of a lack of payment. Big, small or freelance – all businesses have an issue with clients or customers who do not pay. Finance deals that are reneged upon and invoices that are left to gather dust are two big reasons why businesses do not earn what they expect to earn. It could be for innocent or malicious reasons, but either way – your business cannot afford not to get paid. Make payment terms and banking info clear on any invoice you send out to ensure your client or customer understands what is expected of them in terms of payment.
If things get serious, you may need to take the offending client to court. Having help like a collections attorney can help enforce your legal battle when it comes to not being paid what you are owed. However, this is truly a worst-case scenario as court dates do cost money. The very first thing that you need to do is chase up, chase up and chase up again. If an invoice breaches its payment terms, flag it and notify the offender. If it’s getting into silly days without the invoice being paid off, you might need to consider the legal action mentioned above. Always research the clients you work with, and think twice about working with people who will pay late and especially those who will not pay at all for your hard work.
Ideally, if you are losing cash and not making money, it will be someone else’s fault, and thus you can point a finger. However, if you’re in trouble because of your own decisions, you will only have yourself to blame. Pay attention to your budget, make sure you know the limits of your spend, never overhire and always seek to get paid on time. If you have to shut doors because of your own actions, or inaction, you might find that it could be very painful indeed.
Featured image courtesy of freegreatpicture.com.
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