Advivo outlines strategies for recovering when your business experiences unexpected financial loss.
Unexpected financial losses can strike even the most prepared business. Due to circumstances beyond their control, businesses can suddenly find themselves facing substantial, unplanned costs – in fact, 66% of small businesses face financial challenges. But while the initial loss can feel devastating, it does not have to spell the end of your business. As professional providers of business advice in Brisbane, we’ll explore key strategies that you can use to recover after experiencing an unexpected financial loss.
Assess the Damage
The first step after unexpected financial loss is to thoroughly assess the damage. Start by examining your cash flow statements, account balances, credit card statements, and other financial records. Make a list of any areas that experienced an unusual decline or loss compared to projections and prior periods. Calculate the total amount lost for each category.
Some key areas to investigate include:
- Revenue – Were sales lower than expected? Did you lose major clients or contracts?
- Cost of goods sold – Did production or sourcing costs increase unexpectedly?
- Operating expenses – Were there unplanned increases in rent, payroll, equipment costs or other overhead?
- Outstanding accounts receivable – Are customers paying invoices slower than usual?
- Inventory – Did you discard unusable inventory or experience spoilage?
- Investments – Did stock investments decline in value?
By thoroughly auditing your finances, especially with the help of professional business advice in Brisbane, you can pinpoint exactly when and where the losses hit. This enables you to understand the root causes and determine the best path forward.
Cut Unnecessary Expenses
During times of financial hardship, it’s critical to take a hard look at your business’s budget and spending. Cutting unnecessary expenses is one of the quickest ways to stop the financial bleeding and improve cash flow.
Begin by thoroughly reviewing your budget and asking if each expense is absolutely essential at this time. Look for areas where you may have excess spending that isn’t producing an equally valuable return. Delay any major purchases, expansions, or capital expenditures that aren’t urgent.
The goal is to cut away wastefulness and excess while retaining your ability to operate, serve customers, and eventually recover. With careful budgeting and spending reductions, you can significantly lower monthly costs and survive the financial downturn.
Focus on Profitable Offerings
When your business experiences a financial loss, it’s important to take a hard look at your product and service offerings to determine where you’re generating the most profit. This allows you to shift focus and resources to the parts of your business that are most lucrative.
Identify those that are delivering the highest returns and consider cutting back or suspending product and service lines that are less profitable. This frees up resources to double down on your money makers. Identify opportunities to upsell higher-margin offerings to existing customers.
Recovering from unexpected financial loss for your business can feel overwhelming, but taking strategic action is key. The team at Advivo has extensive experience guiding organisations through these situations. Reach out for customised advice on financial recovery strategies tailored to your unique situation. Our financial experts are here to help get your business thriving once again.