by: News Canada
(NC)-Business ups and downs are a part of an entrepreneur's life. But sometimes the downs can reach the point where they seriously threaten the survival of your business.
Many factors can contribute to business difficulties. You may have been outflanked by a competitor, or have been blindsided by unexpected changes in interest rates or a loss of a major customer. The first task in turning things around is to identify problems and develop a plan to deal with them.
Identify the Problems First
Make an honest and critical assessment of your business weaknesses and put them down on paper. Remember, you are ultimately responsible for your business. Turning a business around may mean that you yourself have to operate differently.
Frank Techar, Executive Vice President of Small Business Banking at Bank of Montreal points out that many businesses are hurt because of internal weaknesses. For instance, managers may have been weak record keepers or may have failed to monitor and improve everyday business practices.
"Without a good grip on internal information, you may find out too late that overhead has become unacceptably high or that receivables collection is getting dangerously slow. You need to be able to react to this information on a timely basis and correct problems before they get out of control," says Mr. Techar.
Don't Procrastinate - Start Fixing
Having identified the problems, start fixing them. Eliminate anything that does not contribute to the bottom line. This can be tough to do, but keep in mind that everything will be cut later if the business fails.
A key element in any turnaround strategy is to meet with your banker and other important suppliers. If you are open about your situation and have a plan to turn things around they should be willing to provide help and advice on dealing with your business problems.
Think cash.
Make the hard decisions that will either generate cash or retain it. Sell obsolete or excessive inventory. And when you sell, accept only cash or payment in less than thirty days. Monitor your receivables regularly, and do not hesitate to use a collection agency if necessary.
It won't be easy but if you are disciplined about these important tasks you should be able to put your company on the road to recovery.
Information provided by Bank of Montreal. For more information visit www.bmo.com.