Ask any businessperson and they’ll tell you that knowing how and when to cut your losses is one of the most important skills for making it in the business world. This is because some people tend to cut all loose ends without even trying to remedy the situation, while others decide to stick to a failed business model/plan/investment for longer than they should. Still, in order to learn how to differentiate between these two extremes, you need to learn a thing or two about the steps you can take in order to save your business from an inevitable failure. Here are several things for you to consider.
Think about changing your business model
Laying people off is usually the first thing managers consider when a business starts experiencing financial difficulties. The problem lies in the fact that this is a double-edged blade. Sure, you get to pay less at the end of the month, but you’re also reducing the capacity of your company. Even if you bounce back and get to start hiring again, you’ve laid off seasoned, trained professionals and now have to bring new people in. This is a direct loss of net worth that you can avoid with a couple of alternative techniques.
For instance, you could allow some of your staff members to work from home and relocate to a smaller office. Then, instead of bringing in new people, you could find some freelancers and keep them on a performance pay. This is a business model that can get adjusted to your current workload, which gives you so much flexibility to work with. When there’s work, you get to meet the requirements, which leaves your profit intact. When the workload is low, your overhead is low as well. All in all, a sustainable business model designed for moments of crisis.
Hiring instead of buying
The next thing you need to understand is the fact that oftentimes, you actually waste money on expensive pieces of equipment that won’t pay themselves off in years and years to come. Let’s say that you’re running a small remodeling-focused construction business. Would it be worth your while to purchase a crane right away? Of course not. Just think about it, if you’re using a piece of equipment for less than 60 percent of the time, then the purchase is not worth it. This is especially true nowadays, when you have the alternative to simply hire and outsource.
The same goes for your delivery system and the vehicles used for personal transportation of the senior management. This is definitely where rental cars are a better option. You see, if it’s the reputation that you’re concerned about, then you would have to invest in a luxury vehicle. However, this is incredibly expensive and not even that great of a long-term solution. On the other hand, with the right rental company, you can get an affordable Rolls Royce hire to pick you up at the airport and take you to your important business meeting.
Tomorrow comes before next week
This is a mindset that seems too logical, intuitive or simplistic, yet it’s also something that a lot of people pretend not to understand. Sometimes, people are reluctant to pull necessary moves that they’re uncomfortable with just because they don’t want to harm their business in the future. Most often, this means selling an asset, selling an invoice or moving to a location they deem inferior. Sure, all of these are decisions that will come to haunt you in the future, however, this scenario implies that your business does have a future. In other words, making it work for another day is always a top priority.
The last thing you need to do is reexamine whether the problem that your business is experiencing has something to do with its image, rather than its infrastructure or finances. If that is the case, then rebranding is your best course of action. Provided that you still have a loyal customer base, you can try to keep some of your brand’s identity while working on a new one. On other occasions, nonetheless, it might be for the best to distance yourself from your old brand and start working from scratch.
Of course, sometimes the situation that your business is in might not be salvageable and, in that particular case, you might want to look for other answers. Bankruptcy can also give you a chance to fight another day, especially if you find the right type for your particular situation. Never give up, never surrender, and success is bound to come in the end.