Businesses can go downhill. It happens. As a business owner, you may find yourself getting poor ROI. You are having difficulty paying the bills, or what’s even worse is to not make payroll. It’s definitely a challenging place to be in. You will be required to create some tough decisions and may need to do actions to save your business.
So, before you give up, the good news is: there are a few things you can do to save your business before calling it quits. In this article, we’ll share with you the steps on how you can fix your problem before you decide to close your doors for good.
- Determine the cause of the problem
This is the first thing you should do because businesses may suffer for different reasons. Maybe there are competitors who have joined the marketplace and got a hold of your share of customers. Perhaps, your business hasn’t kept pace with changes in the market. It may seem impossible to take an objective perspective on your business. Begin by looking at the time when profits were up and sales were big. And then identify the time also when it changed. Is it because of the new appearance of a new competitor? Did you fail to update your product or have customers facing rough times? Assessing the problem is only half the battle. If you are able to narrow down the reasons why your business may be suffering, you can pay attention to how you can manage the issue head-on.
- Make sure that you have an effective variable contribution
You must ensure that the price you acquire from your product or service surmount what it costs you to provide an incremental unit, for instance making one more widget or deliver one more hour of service. Perform this for every product and you can have multiple products. If you want to price customers differently, you need to do some analysis at a customer level.
If you find situations that have a negative variable contribution, you need to increase the price, lessen the cost of delivering the incremental unit or put an end to offering that product or service. Although there can be unique exceptions to this rule, commonly, you must make sure that you are making money to cover your fixed costs on each sale.
- Reduce some costs
If you want to keep your business, most likely you need to cut costs. The first step is, get rid of all optional spending like summer outings or company holiday party plans must all go. Then, focus on non-people expenses like reducing your budget for utilities or travel costs. Also, the landlord may give you a chance to reduce the rent, at least for some time, if the other option is empty space because you are out of business.
However, the worse part with cutting costs is when you need to lay off people, reduce their working hours, or reduce wages if there is no choice. Harsh measures are always difficult, but if your other option is closing your business it would be best if you keep some people employed than for everyone to leave their work when the company shuts the doors.
- Renew and Fortify Marketing Efforts
Prioritizing your customers’ needs first is one of the best ways to guarantee success. If you’re providing your customers with what they need, they won’t need to look elsewhere. But if you don’t know what your customer needs, then ask, it’s the only way. You need to know completely what your customer expects and make them aware why you’re the ideal choice for supplying it.
If you are checking in with customers daily, your business will be successful and you won’t struggle. It’s best that you’re on the same page and let your customers know that you’re working hard to keep their needs and your business also. If you worry about reaching new and existing customers because you think it would be expensive, there are some low-cost ways to do it. You can also provide discounts to your customers or provide service with a geographically targeted offer.
- Depreciate the taxes of your business
By issuing the decrease in the value of your assets, depreciation lessens the amount of taxes a company or business pays through tax deductions. Your company’s depreciation expense reduces the number of earnings on which taxes are established, therefore decreasing the amount of taxes owed.
Depreciating assets can provide you with more income on your loss and profit statement and grow your assets on your balance sheet. For instance, the computer you purchase in 2017 for $5,000 less the depreciation of $1,000 taken in 2017 and you’ll be left with a net income of $4,000 and will climb your assets up on your balance sheet by the same $4,000. This is why tax depreciation for business is beneficial.
Ivandrea Ollero is a content writer who researches and writes custom content about home improvements, travel, fashion, and beauty. She graduated from St. Scholastica’s College, Manila, with a Bachelor’s Degree in Broadcast Journalism in 2016. Ivandrea provides helpful tips and hacks on various topics for her readers.