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How To Deal With Financial SetbacksShare:
Amidst crisis brought by the Novel Coronavirus Disease (Covid19), every business establishment is affected significantly which causes temporary or permanent closure of business operations. Everyone seems unprepared even the government. Developed countries like US and European countries were even shocked of the effect of the crisis to their people and economy.
On the accounting side, we may see this current situation as a factor for negative cash flow. Fixed expenses such as rent, insurance, dues and subscriptions, etc. are being incurred and paid although operation has stopped. This only means that cash outflow exceeds cash inflow, which then if you’re not prepared to such uncertainty, your company’s going concern status is shaking.
While every business organization has high hopes of overcoming this difficulty, it is apparent that succeeding months will be tough considering the effect of global recession.
So, to be able to cope-up with this kind of challenges, you should learn how to turn your financial setback into opportunity. Here are some strategies that can really help:
- Budget forecasting
Having a realistic spending plan will allow you to forecast which months your finances will go tight. This will help you in keeping your finances on track. It gives you the opportunity to have control over your money that leads to an organized spending and will result to a good savings. Also, one of the biggest benefits of having a budget is that it allows you to be prepared for uncertainties. For example, when an economic crisis arises, you will be well prepared because your savings will keep you afloat even if your income stops coming in.
- Know the essentials and non-essentials
When facing financial difficulty, it is necessary to cut expenses to address the situation. It might be tough to decide, but to survive, you must sacrifice some costs that you think are not essential. You should be mindful of every decision you make because sometimes as a result of minimizing cost, you’re actually making the situation worse. For example, making substantial layoff of accounting employees will eliminate the possibility to navigate and overcome company’s financial setback.
- Keeping in touch with customers
Before thinking of looking for possible clients, you must first focus on retaining your existing ones. Stay in touch with them and encourage their interaction. For example, make a company newsletter to send updates to your customers to make them feel that they’re being cared of. These cultivates customers loyalty and positive sentiment.
- Network expansion
When facing financial setback, you may be able to use your leads and connections to provide you with some opportunities for growth. Do all possible ways to increase your market. Larger market will give you a bigger chance to offer your services and expand your business. Do not be afraid to go out from your comfort zone, take every opportunity that may come. For example, you might look for international clients to offer your services instead of focusing only on local clients.