Running is a business is expensive, even if you’re operating as small as is possible. If you’ve found yourself struggling with finances when running your self-started business, you’re not alone. Bankruptcies in the U.S. increased to 25,227 companies in the second quarter of 2016, from 24,797 companies in the first quarter of 2016. Thousands of companies struggle to stay afloat, especially those that are run by independent business owners. Use these tips to help you make ends meet and keep your doors open.
Watch Your Credit Limit
While it can be tempting to put business expenses on a card and say “I’ll pay it off later,” this can be one of the most devastating habits for your business. Debts add up surprisingly fast, and putting it on a credit card just puts off the stress until later. A maxed-out credit card uses 100% credit ratio, but FICO recommends that your credit utilization ratio should not be higher than 30% of your original credit limit.
Slim Down Spending
Take a good long look at what you’re spending on every aspect of your business, from leasing your space to paying for advertising. Some of your expenses likely can be cut down on, if not eliminated entirely. For example, you might be able to manage your online presence yourself, especially since 96% of consumers cite design over content as the main reason they trust a site.
Review Your Business Plan
Just because your business is struggling doesn’t mean it’s time to scrap the plan entirely. Go back to your original business plan and compare where you are now to what your goals were. If you find that you’ve strayed from the plan, see what changes you need to make to get back to where you wanted to be. If you’re on track, but things don’t seem to be working, it might be time to revise your original strategy.
Sell What You Can
Who doesn’t love a yard sale? Chances are, you’ve got a few spare items sitting around your workplace that are taking up space without being used. Set up a yard sale for your business, or post listings online for items you no longer use. This will free up space in your workplace while also giving you a bit more capital to work with.
Come Up With A Strategy
Arguably the worst thing you can do for your business when you find yourself drowning in financial problems is nothing. Ignoring the problem or acting like it’s going to get better on its own is a one-way ticket to bankruptcy. As soon as you notice your business struggling to make ends meet, it’s time to come up with a plan of action. Don’t wait until it’s too late to address your financial issues; get a head start whenever you can.
Managing your finances when you own and operate a small business can be a struggle. However, when debts start to catch up with you and you’re struggling to keep the lights on in your business, it’s good to have a few tips you can rely on to stay afloat.