Several factors can affect the profitability of your business. Some situations are predictable, others can happen out of the blue !!! The current pandemic is a prime example. Who could’ve seen that coming? Reorganization can get you back to profitability but think carefully before you do anything you might regret.
Some handy tips:
Face reality when assessing the situation, don’t try and deny how bad it might be. Step back, come to terms with it, and don’t leave it too long before you develop a recovery strategy.
Get advice from a team of experts. Restructuring could be unavoidable as a plan of action, but get the right advice, because restructuring and running a business require completely different skills.
Do not procrastinate. Make the necessary changes…. the status quo is not on the table. You’ll probably have to sell assets and make painful cuts, but one thing’s for certain, you’ll have to make some tough decisions.
Be honest with your financial institution; show them you understand the gravity of the situation and that you have a restructuring plan.
Make sure you have rigorous follow-up. Carefully analyze your monthly results and correct negative deviations if necessary. It can take up to 24 months to stabilize to regain stability depending on the extent of the damage.
Strong relationships with your suppliers will be extremely advantageous. Be proactive and transparent with them. You may have to negotiate some difficult payment agreements.
Plan for new investments once the situation turns the corner.
When things pick up and you’re back in the black, you might want to reconsider continuing your business venture. You’re not alone … Mergex can help you make the right decisions and assess the value of your business if you’re thinking of selling. Call us now and arrange a meeting.