The goal of any business is to grow its business and increase its sales accordingly. However, some firms fail to keep up and have to face bankruptcy. This is a disastrous situation where a company no longer has the assets to pay its debts and deadlines. In order to prevent this unpleasant situation, it is necessary to find the right tactics to apply within the company. So, without further ado, let’s dive into this blog and learn some of the things you need to know to save your company from going bankrupt.
Increase your prospecting
The purpose of a company is obviously to sell products or services. It also has the objective of making its activities profitable. Very often, bankruptcy is due to a very low turnover as a result of insufficient sales. To overcome this problem, increasing the number of customers is necessary.
A more intense prospection is necessary. This can be done through telephone calls, mailing campaigns, appointment setting, promotions, participation in trade shows, etc. If your company is small, the best solution consists of specifying your targets to reach the maximum of the public who can be interested in your products.
Review sales prices
Most business leaders are reluctant to do this. They are afraid of the reaction of their customers, who may flee at the sight of a high price. However, it is an indispensable option if you feel it is no longer possible to keep the same prices as before and risk seeing your business fail. In order to avoid upsetting your customers, it is recommended to proceed step by step. This also allows you to replenish your cash flow little by little.
Prepare your customers in advance and let them know that the prices of certain products will increase. In addition, opt for a strategy that aims to increase the amount of their average basket, especially through the packaging technique. Finally, compensate for the price increase with other services such as fast and free delivery, a premium offer, a permanently available after-sales service…
Reduce expenses as much as possible
It is not a question of massive layoffs or austerity. The goal is rather to reduce unnecessary expenses that cause problems to your cash flow. Yes, that’s easier said than done, because it’s not always easy to identify avoidable expenses.
But as a first step, you can compare the cash flow plan you established at the beginning of the business with the actual cash flow. Look at the expenses incurred for each item and think about how to reduce excess expenses. To facilitate the work, get the assistance of a chartered accountant. Among the expenses that can be reduced are the following:
- Rent: choose a smaller space if you have only a few employees
- Suppliers: look for the best possible deals to get more profit
- Software subscription: if possible, use free software
- Water and energy consumption: educate your employees not to waste energy and water resources. Install high-performance insulation and adequate coverings to mitigate heat loss
- Communication costs: work with a web agency that is able to promote your brand at a lower cost. It is also more advantageous to rely on social networks.
- The cost of purchasing office furniture and equipment: instead of buying new furniture and equipment, repair damaged ones.
Paying off debts to creditors first
When preparing the balance sheet and income statement at the end of each fiscal year, prioritize paying all your suppliers and creditors. Then you can proceed to the profit sharing. If there are no more profits to share, paying all your debts first will protect you from bankruptcy.
Conduct a budget management study
To ensure the smooth running of your business and to prevent losses, it is essential to stabilize the capital throughout the activities. To do this, you need to have an understanding of budget management and the techniques needed to balance expenses and resources. If you have concerns about this, it is recommended that you seek the services of a professional chartered accountant.
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