Financial shock in a business is a usual thing that happens periodically especially when the right steps are not taken to mitigate it. Financial shock in a business can make it stronger or crash once and for all, why do you have to learn from a bad experience when you can learn ways to avoid it.
This article will help you to stay prepared and agile during financial shocks. Some financial shock can be caused by the recession in a country, sudden repair or replacement of your equipment, hike in material price and damaged inventory or natural disaster. The following will help you to stand immune to these kinds of financial shocks.
Always Keep Extra Cash
Big corporations always have what is called retained profit at every end of the year report, this fund is mostly for precautional motives. You can also adopt this to prevent a situation that you won’t be able to handle. Always have some cash left in your official purse for contingencies. Acquiring of assets and investments for the business is also a good way to go about this. When you see trouble on the horizon, you may want to start liquefying some of your assets. Remember that in a recession or other crisis, having cash on hand will give you an advantage over your competitors.
Maintain An Impeccable Credit Rating
This is important for you to be able to have easy access to credit facilities. You will be yourself in a very good position to get a loan from different credit organizations if you have a good credit rating. A good credit rating simply means paying your debts back when you are supposed to or even before.
Monitor Your Cashflow Closely
Cash flow is very important, it is important for you to know how money is coming and going out of your business. You need to know how much you can realize over a period of time and how much you are possibly going to spend.
That, of course, means working with customers to ensure that they meet their obligations to you. Don’t wait until a crisis hits to deal with cash flow. Instead, use a reliable AR system that provides you with detailed cash flow reporting. If necessary, consider hiring a collections agency to hunt down the money that customers owe you.
Also be very mindful of your debt management, set up a type that will not affect your finances in a huge way especially during a financial shock.
Be Competitive Everytime
Relevance is built with intense competition, therefore make sure you are always on top of your game. Make your customers find it hard to find a better alternative.
Remember that if economic hardships are impacting you, they are likely impacting customers. Consumers will be cutting back on spending. They’ll also expect to get the most that they can out of every purchase they do make.
Keep A Customer Service Focus
Customer service is not a department in your business organization, it is an attitude that you and each of your employees must imbibe to grow as a firm especially during a financial shock to stay afloat.
One place where you should not ever cut back is customer service. No matter what else must be trimmed, it is imperative that your customers know they will always deal with workers who are friendly, knowledgeable and empowered. As a leader, you can help by maintaining high employee morale in difficult times.
Make sure you take note of the following, put the things that need to be on standby on standby and start running the ones that can start running. It will possibly save you a lot of stress in the nearest future.