How to Overcome a Setback in Business

If you are a business owner, sooner or later you will face either a difficult financial situation, a crisis within your business or even a business failure. The trick is learning how to come out on the other side stronger and wiser for the experience.

Instructions

Difficulty: Challenging

Things You’ll Need:

• Business Plan Software

1. Believe and trust in your ability to overcome whatever problems come your way. That's the key to getting through any crisis.
2. Seek counsel from someone you trust, preferably someone in an industry like yours who has built his or her business from the ground up. Chances are, he or she will have encountered and overcome the exact problem you face.
3. Evaluate the situation and determine if it will have a negative impact on your cash flow or cash reserves. If you find that you will be short of cash to meet payroll and other financial obligations, look for ways to reduce your everyday expenses. If your cash is seriously affected, consider temporary layoffs of nonessential employees.
4. Keep a positive, upbeat attitude. If you look more worried than usual, your employees might get nervous and start looking for employment elsewhere.
5. Advise vendors of your situation if it is certain you will be late with payments. Before you contact them, however, be prepared to discuss a payment plan. When asked when payment can be expected, your answer shouldn't be "I don't know."
6. Review your current business plan. Change your plan as necessary to help reverse the setback and to prevent the same situation in the future.
7. Relax and unwind. Take a drive, go see a movie or steal away for a short nap. Getting your mind off your worries, if only for an hour, will allow you to come back to the problem and attack it with a clear head.

Tips & Warnings

• Keep the names of a good accountant and attorney handy.
• Do everything in your power to pay your bills on time. If you make a payment arrangement with a supplier and can't meet it, call your supplier before he or she calls you. Vendors aren't thrilled when you can't pay your bills on time, but they will usually work with you if you have a history of prompt payments.
• Try not to hide from the problem by postponing critical meetings or not returning phone calls. This kind of behavior is unprofessional and will raise red flags with business associates.
• When discussing your situation with vendors, there's no need to spill your guts and tell them things they don't need to know. Keep the conversation as general as possible when it comes to why you have a problem paying and as specific as possible about when they can expect their money.
• When faced with the necessity of cutting your workforce, start with administrative personnel. Keep the people who generate income for your company as long as you can. Letting employees go is a difficult task, but keeping nonessential people on the payroll will quickly drain your company's financial resources.
• Reduce expenses by scrimping on office supplies and reducing or eliminating employee expense accounts for travel and entertainment.
• Try not to take the situation too personally. Heated words from suppliers who are owed money or from employees you had to lay off are just that - words. In a difficult situation, keep calm, be professional and adhere to your plan for recovery.
• Under no circumstances should you make promises for payments you can't make. Do not release checks until the money to cover the checks has cleared and is in your account. Even if the recipient promises to hold the check until the funds are available, don't release the check. A bounced check, for whatever reason, does more to undermine your credibility in business than anything else.