Every business goes through rough spots. And not acknowledging tough times only makes bad situations worse.
What can you do about it? Here are some useful tips from Bank of Montreal.
(Don’t be so surprised. Years ago, the banks pledged to significantly raise their support for small business. Now if you go to BMO’s site, they have maybe two dozen stories with tips and ideas for small businesses. It’s a pretty sad effort, but you’ll probably find something of value by clicking here.)
So what do you do in tough times? BMO’s article, “Eight Tips and Steps That Can Help,” offers, umm, eight tips.
1. Face the facts
Be realistic about your company's situation.
2. Identify and address the root cause of your problem
Make sure you know exactly how your company makes money. Which activities are the most profitable? Which are the most expensive?
3. Seek help
Look to others within and outside your business for their expertise and assistance.
4. Generate cash quickly
Can you sell some assets that you are not currently using? Can you sell and lease back key assets that are tying up working capital? Can you collect receivables faster?
5. Keep your key business partners fully informed
Inform business partners of your situation well before breaking any commitments with them.
6. Negotiate extended terms with your creditors
Can your banker live with interest-only payments until you get your new plan in order? Did you have an aggressive repayment plan on your loan that can be amended? Will key suppliers accept a partial payment prior to shipping goods?
7. Restructure your debts
Can you restructure your operating debt and obtain a term loan to free working capital? Can you convert some debt into equity? Can you inject personal funds into the company?
8. Formulate a turnaround business plan
Have you got a plan in place to address your root problems? Will you be able to measure the success of your plan in a short time?
Later on we'll check in with some of the other banks to see if they have any better ideas.