The biggest fear of companies has a name: bankruptcy. Whoever starts a business is aware that he will go through several challenges in business management, and knowing how to escape the financial crisis over the years is essential to avoid business bankruptcy.
A recent study by IBGE, Business Demography and Entrepreneurship Statistics, showed that Brazil closed more companies than it opened in the last 4 years.
Undoubtedly, some of the main reasons for this to occur are poor corporate management and inefficiency in relation to financial health. After all, the adoption of good practices can decrease the risks in the face of an economic crisis.
Currently, the world is experiencing economic instability due to the coronavirus pandemic and as a result, many companies are already adopting measures to have how to escape the financial crisis.
Among the alternatives for your company to avoid bankruptcy in times of crisis, which go beyond cutting staff and expenses, are:
- Review of products and services offered;
- Exploring new market possibilities;
- Debt renegotiation;
- Cutting operating costs;
- Implementation of emergency business planning;
- Strengthening the relationship with customers.
In this article we will teach you how to maintain the company in times of crisis. Check out.
What is business bankruptcy?
Poor business management can even withstand times when the country's economy is making great strides. However, in crisis situations, like the one we have seen in the world, due to the coronavirus, this can be the trigger for bankruptcy.
Read too: [EBOOK] 4 signs that your company may be failing
We can explain bankruptcy as a reality where the company can no longer afford to pay its debts. This legal situation occurs on the part of the organization's creditors or partners.
When the company goes bankrupt the assets are used to settle your debts.
In Brazil, this situation is supported by Law No. 11,101 of February 9, 2005, called “Bankruptcy Law”.
Tips to avoid company bankruptcy
A recent survey by Sebrae showed that one out of four companies cannot avoid bankruptcy and only lasts 2 years on average.
When a manager thinks about measures to escape the financial crisis, in delicate moments of the economy, the first thing that comes to mind is the dismissal of employees.
However, other measures can be taken within financial management in times of crisis to avoid bankruptcy. We'll talk more about them below.
# 1 Review of products and services offered
Products and services are the ones that move your company to success or failure.
If you can attract and conquer the consumer, the trend is for sales to remain high.
On the other hand, if the business management of services and products is not done well, your company can go from bad to worse, making it impossible to avoid bankruptcy.
In this case, to have as escape the financial crisis it is essential that your company is at all times evaluating sales results and doing a review of products and services.
In times of crisis it is important to evaluate what sells and what doesn't and even make cuts if necessary.
Creativity can be a support and nothing prevents you from inserting new products, that reach the needs of your target audience.
Within this review, with the goal of betting on shares to know how to escape the financial crisis, make promotions can be an alternative.
This can attract new audiences and even increase sales, especially in products that are at a standstill.
# 2 Exploring new market possibilities
Regardless of an economic crisis, the market still offers new daily possibilities and it is up to the business management team to know how to take advantage of them. For example, we have seen in the current crisis the service of delivery being enjoyed as never before.
Many restaurants closed their doors, but they were able to explore a new market possibility in order not to decrease sales so much, some may even earn more.
Another advantage within this scenario is that many cut the value of freight, stimulating purchases.
These are some of the examples of how to escape bankruptcy and recovery of companies, keeping the business running through new paths and possibilities.
# 3 Debt renegotiation
Debts, in a company that goes bad in the legs, can become a snowball if there is no immediate measure.
Postponing a decision can make the case irreversible. To avoid bankruptcy, debt renegotiation is a good alternative.
We have already talked about the importance of debt renegotiation in the article: “Debt renegotiation: what is it and how to choose the best option?”
Many companies take out loans from several banks and overburden their financial health. In times of crisis the best thing to do is to renegotiate the debt balance with your creditors, to have new payment terms and a new interest rate.
This is a demonstration that your company is looking for more responsible business management and looking for alternatives on how to escape the financial crisis.
It is essential in the midst of the crisis to try to put everything in order and not to accumulate more debts.
A risky option, but one that works for many companies, is to take only one loan to settle all other financial issues and keep only one debt outstanding.
However, this planning needs to be extremely thorough and error-free.
# 4 Cut operating costs
The first step for those who are looking for how to keep the company in times of crisis is to cut costs.
Wiping out operating costs is not only part of business management in a crisis, but a routine of companies that want to maintain their financial health.
Avoiding bankruptcy also involves measures in which the company invests money safely, without making debts that it will not be able to pay.
The secret is perceive bottlenecks and unnecessary spending that can be cut to avoid bankruptcy in times of crisis.
Since wiping costs is possible increase revenue and profits and decrease service fees and products.
Thus, it is essential to constantly reassess the cash flow, taking into account what enters and what leaves the company, in order to have a macro view of what can be cut in times of crisis.
# 5 Implementation of emergency business planning
Anticipating problems is part of successful business management and can prevent business bankruptcy.
When we talk about bankruptcy and business recovery, it is crucial that the organization has emergency business planning in hand.
Of course, in this sense, everything must be planned in advance. The crisis itself is a common destination for any company, especially when the country's economy is low. However, it is up to the organization itself to determine how to deal with this crisis.
Risk management in this case can prevent the company from going bankrupt.
In this planning model, managers foresee different scenarios and possible problems that the company may have over time.
Putting measures on the table that can avoid these situations and even remedy them when they appear.
Therefore, designing and implementing emergency business planning, which includes, for example, the creation of an emergency reserve, is crucial for the company to be able to deal with the crisis, suffering as little as possible and avoiding a bankruptcy reality.
# 6 Strengthening customer relationships
The strengthening of the brand in the market depends on the good relationship with the customer. In fact, this is one of the most important points for the company to keep up well for years, even in times of crisis.
Well, customers who feel empathy and have a good relationship with the company end up becoming regular consumers and do not leave their mark even in the crisis.
We have seen with the coronavirus pandemic many restaurants offering promotions to their customers, free delivery and an experience, if not the same, very similar to what they have inside the restaurant itself.
Thus, they seek to maintain the customer loyalty, even in times of crisis, and manage to strengthen their image. In times of financial crisis, we can consider in this strengthening of the brand, actions such as:
- promotions emails;
- free deliveries;
- product delivery;
- informative content on social networks;
- satisfaction survey;
- emails and thank you messages for the purchase.
Business recovery and bankruptcy: make an assertive assessment
The crisis is an equal scenario for all companies at some point.
Some suffer more, those that do not have a determined business management, and others suffer less, because have an emergency plan well-designed tool that offers tools on how to escape the financial crisis.
When the crisis arises, it is normal for many organizations to believe that there is only one way, layoffs. However, as we can see in this article, it is possible to avoid bankruptcy by adopting other types of measures that go beyond cutting staff or expenses.
It all depends and a lot on a responsible business management that has as its goal to keep financial health up to date. For that it is necessary anticipate adverse scenarios and having possible solutions up your sleeve to face the crisis.
Not only that, it is also necessary, from now on, to adopt good financial management practices that keep the company up to date with its accounts. This goes through steps like:
- reassessment of products;
- exploration of new market possibilities;
- strengthening the relationship with the client.
To implement new ways to manage costs and expenses can help your company make a strategic financial management. An example is the HR Consultants UKy a new product from HR Consultants UK, on demand salary, which companies from all sectors can offer as corporate benefit employees and grow in loyalty and productivity.
Online businesses can also benefit from this model. Read more about this at; “On-demand payment: what it is and how to adopt the salary on demand! ”
Crises will appear, so the company must have tools to face them to avoid bankruptcy. In this article we present some possibilities in this regard to help you. We hope you can make a good profit.
Did you like our article? Follow HR Consultant UK on social media Facebook, Instagram and LinkedIn and stay on top of the best content for the management of your company.