It is not a big surprise to know that every start-up gets into trouble during their initial stages of operation and sometimes even before launch. They find themselves unable to pay bills or even struggle to generate revenue streams. This is a definitely a fight or flight period during a venture and statistics show that 80 percent of businesses failing after only one year of operation.
So we are here to give you some general thoughts to help businesses find their way back to the light. However,it is not as simple as it may seem but it will definitely help to get expert advice from experienced business professionals especially those who you are noncompeting with. You can even find a collaborative strategy to evolve your business and build your reputation block by block with that of an existing thriving business.
From our end, here are somethings you should definitely see to yourself because change starts with you;
Eventually when things start taking a turn for the worse, the first thing you will have to do is to reduce expenditure. You have to start by eliminating discretionary spending like outings, parties or casual events. The next thing you need to look at is your utilities and you should know that going green is not just for the environment.Energy savings have done wonders for multinational franchises worldwide. So,instead of laying off people which can be hard, save electricity, use laptops instead of PC’s and try to execute paperless paperwork. You’d be pleasantly surprised to know how many millionaires carpool today. We worked with a solar energy products company who we helped by using their own products to save recurring costs in their office. We offered another company to sublet their space to other start-ups that can complement their business thereby mutually benefiting both businesses.
Prioritize your Dues.
Many start-ups start from negative and not even zero so they usually go through a time phase in which they owe more than they have. So, they need to prioritize what to pay and when to pay it. First, you have to focus on payments vital to your daily operations.For example, if you do not pay your employees, there will come a time where they will seek out other work which pays them. Your employees are your top priority, in fact, Jack Ma even claims that you should treat your employees better than your customers as they hold the key to your business’s success.After your employees, next comes in dues that may result in penalties or fines if they are late like utility bills, taxes and other payments. Finally, you should then focus on payments with no late penalties and payments that are not yet late.
Plan your cash flow and revenue streams carefully.
Once you have prioritized your outgoing payable, you need to then assess the money that you have and the incoming receivables you expect to collect in the form of purchases and the profit they bring in. After organizing your cash flow plan, you need to determine who you will pay, how much you will pay them and finally when you will pay them. Your revenue streams should be always flowing even if there arena high tides. We accept that most businesses do not sell their products or services all-year round but they do manage to bring relative incoming on monthly basis.
Communication Channels and MarketingStrategy
Start-ups often ignore or overlook the two things that can boost their business faster than anything they do. These two things are communication and marketing. Traditional marketing is almost flushed out and mostly used by the big guns with huge marketing investments. However, digital marketing levels the playing field if you execute it right. SEO, content marketing and PPC are doing wonders for businesses in terms of both cost and responses. So much so that they can even calculate the ROI to adapt or improve their strategies for the future. When it comes to communication channels, look for cost-effective options like SMS Marketing, emails and even referral programs. The results will definitely be better than you hope for.
From a personal perspective, we know and understand how difficult things may seem at this moment in your sinking start-up but there is light at the end of the tunnel. In fact, it is situations like this that have brought about the greatest entrepreneurs we read about every day so you can definitely fight your way out of it.