Almost every industry has been rocked by supply disruptions, rising oil prices, and a global economic downturn. However, there are still ways to make a healthy profit, even when business isn’t booming. By allocating your funds strategically, you can maintain a positive cash flow and ease the burden of financial stress at your company. Even a few small changes can make a big difference to your quarterly financial outlook. Follow these tips to get rid of financial stress:
Building a Strategy
Data gathered by McKinsey shows that corporations which reallocate their funds are more financially stable and turn over a larger profit for shareholders. CEOs that choose to reallocate their resources earned 30% higher returns for shareholders, were 13% less likely to become bankrupt, and were less likely to be fired than peers who did not shift resources.
But, building a resource reallocation strategy isn’t as simple as it sounds. Sometimes it feels as though you’ve run out of options or are running into a brick wall each time you open your business’ financial documents.
The same McKinsey report advocates for a target-based approach to resource reallocation. A target-based approach helps you focus on areas for growth and expansion, rather than lament lost funding. Even a few small targets, like growing your reach and engagement in market ‘x’ by ‘y%’, can help your business find its footing during uncertain times.
Cutting Basic Costs
Setting ambitious targets when reallocating your resources can help spark long-term growth. However, in the short term, you will need to cut back basic costs and overheads. Ideally, the cutbacks you make shouldn’t have a lasting impact on your business’s ability to operate, but should still make a meaningful difference to your immediate cash flow.
Start by reassessing your current workspace. Renting an entire office can be a massive overhead that may not be necessary for your employees. Instead, consider a coworking space where you can rent individual desks for your employees to work at.
Next, look through emerging automation software as service (SaaS) programs. You may be surprised to find that some roles can be automated — meaning you no longer have to outsource expensive HR payroll departments or invoicing. You can also boost your e-commerce efficiency by looking into automated programs that take care of taxing processes, like abandoned cart email blasts or inventory updates.
Finally, evaluate your current workplace productivity, and try to identify areas of slack or unnecessary time wastage. Excessively long meetings aren’t just a bore — they cost your company money. You can also revise KPIs to align with your new reallocation strategy, thus giving you a more accountable and cost-effective workplace.
Digital Marketing Strategies
Digital marketing is a cost-effective way to bring more eyes to your business. This is important, as you can’t afford to cut back on marketing altogether, but still need to find budget-friendly ways to market yourself.
Utilizing digital marketing is particularly important if you work in an industry where budget cuts undermine your ability to compete. For example, if you work in real estate, then you cannot afford to cut back on purchasing assets as buying and selling buildings is the very bedrock of your business strategy.
Instead, consider using digital marketing in real estate to cut back on operational costs. Digital marketing can help you reduce your costs and may even be more cost-effective to build your brand. SEO-optimized web pages and branded social posts help you connect with folks who don’t live in your immediate area. This is particularly important today, as many people who work remotely are looking to move away from their hometowns.
Regardless of the industry in which you operate, digital marketing provides a creative, cost-effective solution to building your brand while curtailing your costs.
New Businesses in Financial Stress
Staying afloat during the first year of your operations is difficult. Most new businesses fail even during times of economic prosperity, so making it during a downturn is an even greater challenge. However, that shouldn’t put you off if you have a clear vision and the business know-how to make it through the year.
As an entrepreneur, you can navigate economic uncertainty with greater peace of mind by creating a tailored crisis management plan. A crisis management plan gives you a clear route to follow if things start to go south, meaning you won’t incur further costs by responding too slowly to market pressures.
As your business starts to grow, siphon some profit towards an emergency fund. An emergency fund should cover you for three to six months of operations and may help you make it through periods of low turnover or financial stress.
If possible, try to diversify your income streams to spread risk. Ideally, your income streams should be set up to complement one another. For example, if you run a business that sells confectionery, you can diversify your income stream by using the same suppliers to produce some savory goods, too.
Conclusion
Coping with financial stress is always challenging. However, by reallocating your assets you can stay ahead of the competition and identify new areas for growth in your industry. Cutting down on basic costs like office rent can free up capital for new uses that may help you diversify your offering. With a more diverse offering, you can spread risk and help ease the burden of financial stress.
