There are many reasons why businesses fall on hard
times – and it’s not always the fault of the broader economy.
Poor management, a bad location, over-expansion,
insufficient capital, or a lack of planning – many of these factors, if
not avoided, can certainly weigh down a business or even sink it.
If your business is experiencing financial difficulty
and is struggling to survive, here are some steps you can take to keep
the creditors and the IRS from your door, as well as some potential
lifelines and “refresh” business strategies that can help you stay
Managing Cash Flow
Getting a grip on cash flow is the first essential
step towards positioning your business for survival and future growth.
Start with an assessment of your
short-term cash flow and develop a plan for your
immediate needs. This includes taking stock of all outflows – including
credit card bills, utility and commercial lease commitments, bank loans,
employee payroll, taxes, etc. – together with an assessment of your
incoming cash flow and a plan for prompt collection of payments owed.
If you need to delay payment of other bills, try
working with your suppliers to reduce rates, or implement a payment plan
that gives you time to get back on your feet.
But, however severe your cash flow issues are, try to
be meticulous about paying taxes, particularly those associated with
employee payroll. The IRS holds business owners liable for unpaid
employment taxes, whether you are incorporated or not.
Below are some excellent resources to help you manage
your business cash flow and take control of your business finances
before they take control of you.
- Understanding and Expanding Cash
Flow – Learn how understanding your cash
flow trends can help you take control of your business finances.
- Bookkeeping Basics for Small
Business – Proper bookkeeping practices
are important to the operation and survival of any business. Without
them, your business is susceptible to not only cash flow issues, but
potential legal problems as well. To help business owners have a better
understanding of smart bookkeeping practices, read this quick 101 in bookkeeping basics.
Leverage Financial Lifelines
There are several financing lifelines that can help
small businesses overcome short-term cash flow problems or help
alleviate existing debt. These include:
- Revolving Lines of Credit (RLC) – A
revolving line of credit (RLC) is a flexible method of borrowing cash
for your small business. It is very similar to a credit card in the
sense that an RLC has an established credit limit that you can borrow up
to, only without a plastic card. Although do note that to receive an
RLC you must be operating profitably. Read “The Basics of Revolving Lines of Credit”
to learn more about how you can apply for and
take advantage of revolving lines of credit.
- The ARC
Loan Program – Interest Free Loan for Debt Repayment – Backed
by the SBA, the ARC Loan program was introduced in 2009 to help small
business owners who are struggling to pay the interest on existing loans
and debts such as credit card bills, capital leases and other loans
made without an SBA guaranty. The program provides interest free loans
of up to $35,000 for up to six months. Read “Managing Small Business Debt –
Government Loans and Refinancing Lifelines” for more information
about this and other programs from the U.S. government.
Learn from other Small Business Owners