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How to Deal with Debt and Keep Your Business Afloat

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StrategyDriven Managing Your Finances Article Deal with Debt|Deal with Debt|How to Deal with Debt and Keep Your Business AfloatThere is no magical money tree that provides unlimited finances. If there was, business would be a whole lot easier. In reality, the lack of money is the downfall for many businesses. When cash flow is skewed and there’s not enough revenue being generated, this will lead to companies descending into debt.

The debt hole is one that many will fall down and fail to escape from. The result: their business disappears forever.

There are plenty of statistics which back this up. It is said that 50% of small businesses will fold within five years of opening. The main reasons for this include:

  • Insufficient startup capital
  • Inadequate financial planning
  • Poor management
  • Cash flow issues

While the position is difficult to come back from, it’s not impossible. As the following guide will demonstrate, you can deal with the debt and keep your business afloat in the process.

Look at the numbers

When it comes to a starting point for solving your debt quandary, you should always begin by having a general overview of the situation.

If you focus on the numbers, you can gain a deep insight into your current problems. By viewing the revenue and expenses of your business with a magnifying glass, you can truly understand why your debt has cropped up over time.

With this type of information, you can begin to plan for the future. You may craft a budget that will steer you out of trouble. You will understand how many sales are required to start producing a suitable profit. You can also figure out what type of costs your business can eliminate – more on that in the next section.

Reduce costs

As with any budget plan, one of the main focuses should be on your costs. If you can cut away unnecessary expenses, you will typically save a significant amount of money – the type that can go towards wiping out your debt.

Fortunately, there are various different options available when it comes to making budget cuts. Here are a few to consider:

  • Relocate the business: It might not be cost-effective in the beginning but relocating to a cheaper location can seriously pay off in the long run. Plus if you truly want to save money, consider abandoning the office space altogether and create a remote team.
  • Utilize technology: If you select the right technology, you can reduce the need for you and your employees to spend on certain tasks. For instance, you wouldn’t necessarily need someone managing the books if you use specialist accounting software that automates the process.
  • Freelancers instead of employees: In-house employees are expensive. Along with their regular wage, you have to consider aspects such as benefits and taxes. This isn’t the case when hiring a freelancer. You can simply pick to pay a set fee for each task/project, and there’s no need to retain a freelancer or agency.
  • Go paperless: Paper, mailing supplies, postage, ink – these are costs which will seem minimal on the surface. Yet they can quickly add up to being a significant expense for your business. If you go paperless, you can effectively eliminate these types of payments.

Just remember: don’t go overboard when reducing your outlays. You never want to remove so much that it negatively impacts the overall quality of your business. Your products and services need to maintain their standards – otherwise you’ll also lose something else: your customers.

Improve your marketing

Now when the previous point talks about reducing costs, you might be wondering how it’s feasible to improve your marketing. However, you don’t have to throw money at promoting your business. This can be done with a very limited budget – you just have to be savvy and strategic about it.

For instance, you can utilize social media to promote your business. It’s free to sign up on the likes of Facebook and Twitter, and you can build a healthy following and reach with a regular flow of shareable content. Even something as simple as offering a coupon code can be an effective marketing approach.

When you boost your advertising efforts, you will naturally increase your sales numbers – the ideal tonic to any debt issues.

Contact your customers

Your current customer base is what’s keeping your business alive at this point. Yet this same customer base can be used to grow your company to a new level.

First of all, you can increase sales numbers by specifically targeting your current customers. If you supply them with exclusive deals, they are likely to bite. After all, they’re a customer for a reason – they already enjoy what you’re offering, and they will do so even more if they receive a discounted price.

You can also contact customers as a form of market research. Ask them for feedback on what they like and dislike about your business, what they’d like to see from a new product range, and so on. This type of research can help guide your business towards a prosperous future.

Get in touch with creditors

If you contact your creditors and explain your current predicament, they might be willing to negotiate more favorable repay terms. This can help keep away the potential of facing a debt lawsuit.

Although no matter how much you try, creditors can decide to hit you with a lawsuit. They might feel this is the only way to get you to pay the debt. Before you do, however, analyze the options available. You can acquire professional legal help with pay off when dealing with a debt lawsuit. Their expertise

Sell up

If your debt has consumed the business and there’s seemingly no solution, there is one way of getting out of the problem: sell the company. If you sell the business, you can instantly pay off your creditors and get away from the situation.

At least, that’s if you can find a buyer. If your business is in the unfortunate position of having larger debts than assets, this won’t look enticing to buyers.

The Demotivated Employee: What Causes Employees to Lose Their Motivation?

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StrategyDriven Managing Your People Article | The Demotivated Employee: What Causes Employees to Lose Their Motivation?Think of the last time you started something new… you were so excited that you couldn’t sleep the night before… you woke up without the alarm… etc.  That is what motivation looks like. It may have lasted a long time, or perhaps it dropped off like a waterfall once you got to work. Has this ever happened to you?

It’s likely that you can relate because most of us, at some point in our careers, have had this happen to us. In fact, my colleague, Dr. Cathy Bush and I, have heard lots of stories from MBA students describing similar situations in their professional lives. Because we’ve heard these stories so much, we decided to do some digging to figure out what was causing employees, who were once highly driven and committed to the work, to lose their motivation. And what we discovered were five sources of demotivation or factors that contributed to employees losing their motivation. However, not only did we identify the sources, but we also pinpointed behaviors that leaders can execute to prevent demotivation from occurring in the first place. Or, if it does happen, to help repair the damage that’s been done and to help employees regain their “motivation mojo.”

So, here are the five sources of demotivation and what leaders can do.

  1. Individual differences. Your personality, attitude and competence play a role in keeping you motivated. For instance, when we work in positions that are suited to our personality preferences, we’re more likely to keep the motivation that we brought to the work and to contribute in meaningful ways. Or when we’re feeling good about our ability to complete tasks or to perform well in our job, we’re more likely to be motivated. While this source is primarily attributable to the individual, it doesn’t mean the manager doesn’t have a role to play too. Because of the pandemic, employees may have new responsibilities and find themselves in situations where they may not be prepared or have the necessary skills. It’s important for managers to pay attention and help their employees to “get up to speed.” The sooner you do this, the sooner your employees can gain the necessary competence and confidence to perform their new tasks successfully and fulfill their job responsibilities.
  2. Stress. It will come as no surprise that stressful work conditions can cause employees to burn out and dread going to work. While stress can give us short-term boosts to meet deadlines, it can become debilitating, adversely affecting our health and well-being, when it returns frequently or lasts for long periods of time. How leaders respond during times of stress is critical. Given the sudden changes and uncertainty that have occurred as a result of the pandemic, employees are stressed. So, as a manager, research the top tips to avoid burnout at work and take the time to have a one-on-one conversation with your employees to talk about how their adjusting to the new changes and to see what’s working and what’s not. This will give you the opportunity not only to listen and to empathize, but to work with the employee to address stressors the individual is dealing with.
  3. Organizational culture. Culture is a big deal. The significance of culture is rooted in the fact that it consists of core values that permeate every part of the organization from norms to decision making. People often choose to work for an organization because the culture “fits” their preferences for how they want to work. Kim Cameron and Robert Quinn (2011) have identified four cultures that are indicative of most organizations: clan, adhocracy, hierarchy and market. Each of these cultures has a unique set of values that influence multiple facets of the organization from the flow of information to how firms integrate standardized processes and procedures. If there’s a “mismatch” between the organizational culture and how an employee prefers to work, there’s a chance the employee will no longer be motivated. So, leaders should pay attention to how social distancing and remote work are affecting their culture. For example, adhocracy cultures are characterized by lots of collaboration and teamwork in order to drive innovation in the marketplace. Replicating those values in your new “virtual” culture will be important, so employees continue to work in ways that are congruent with the values that caused them to choose your company.
  4. Conflict with co-workers.Conflict is going to happen. It’s inevitable. When you bring together people from diverse backgrounds, with different ideas, agendas and experiences, you’re going to have conflict. So, don’t be afraid of it. Conflict, if it’s managed well, can be healthy for the organization. How so? Well, when conflict surfaces because employees have different ideas about how to roll out a new product, as an example, this can be a good thing for the organization. Why? Because the manager can use this opportunity to create a hearty debate that allows employees to really “drill down” on which idea makes the most sense based upon data. This can result in the company achieving a better outcome than if everyone simply agreed upon everything from the outset. Being able to do this in a way that doesn’t result in hurt feelings and winners and losers, will require leaders to create the cultural conditions that allow employees to see conflict as something to be embraced, rather than something to be avoided.
  5. Leadership Styles. We’ve heard the saying, “people quit their bosses, not their jobs.” How leaders behave when managing their folks has a profound impact on employees. When managers show that they trust employees and allow them to give input to decisions, they create an environment where employees feel valued and are more likely to be committed. However, when leaders fail to keep employees informed with timely and relevant information, or don’t ask for their input on decisions or ignore obstacles that are getting in the way, employees will lose their motivation over time. Because these “failures” adversely affect employee engagement and motivation, leaders should pay special attention to them during this time of crisis. Given all of the uncertainty and angst about how the virus may affect the business and jobs, managers must ensure that communication is honest and ongoing. Employees can handle the truth. It’s important that you tell them. Keeping employees informed about what’s going on, removing obstacles that are getting in the way of their remote work and soliciting their input, where appropriate, can go a long way towards helping employees to maintain their motivation, in spite of the difficult circumstances.
  6. Lack of success. Everyone needs a little bit of success at work. It’s necessary for feeling like you’re making a contribution and doing a good job. A lack of success, however, is often a sign to employees that they need to move on – and that can be bad for business. So what can you do? Well, it depends on the areas in which your employees are struggling. If they’re finding it difficult to convert leads, then sales coaching techniques could help. Likewise, if they’re struggling to master their current position, then they may require professional development. Small acts of generosity on your part can make a tremendous difference in both how they approach their work and their productivity level. 

Imagine if we lived in a “work world” where employees woke up every day excited to go to the office? It may sound like “pie in the sky,” but actually it’s not. If it were, then we wouldn’t have the Fortune 100 Best Companies to Work For™ list. By attending to the five sources of demotivation, leaders can create workplaces where employees are highly motivated and engaged. So, in the words of the great philosopher, Yoda, “Do. Or do not. There is no try.” Let’s stop causing employees to be demotivated, and instead, behave in ways that cause them to keep their “motivation mojo.”

About the Author

StrategyDriven Expert Contributor | Tara PetersTara Peters, Ph.D., is a gifted educator, TED Talk speaker, bestselling author, and international consultant with a client list that includes Coca-Cola, Allstate, Walmart, and Ocwen. A professional educator for more than 26 years, she currently serves as a professor at Northwood University’s Richard DeVos Graduate School of Management and as academic dean for its Texas campus. She is the co-author of the new book The Demotivated Employee: Helping Leaders Solve the Motivation Crisis That is Plaguing Business.

How to Successfully Market a Niche Business

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StrategyDriven Marketing and Sales Article | How to Successfully Market a Niche BusinessMarketing any business is a tricky process. There are many different elements to consider, from the target audience to the allocated budget. Then there are all the different advertising channels available, where you have to try and figure out which ones work best for a business.

It’s difficult, right? Well, throw a specialised niche into the mix, and the challenge becomes even more severe.

Or is it?

While working in a particular niche will limit the options available, there’s still plenty of potential to craft a killer marketing plan. It just depends on how you approach the task. To help you out, here are a few tips on how to successfully market a niche business.

Know the audience

As with any business, any marketing plan begins with getting to grips with the audience it is targeting. You need to understand why customers decide to shop at your niche business. You also have to figure out what might be turning them away, and if there are any potential opportunities available that are currently untapped.

Remember: this is more than just the basics like gender, age range, and income. You must gain a deep understanding of their behaviour patterns and preferences.

Use the right content

Once you understand the audience, you’ll already have a firm grasp on what type of content will work to bring them in.

For instance, if you were promoting a law firm, flashy graphics and funny videos are not exactly suitable. The audience you are targeting is one that seeks a company that exudes professionalism and expertise. Posting cat memes is only going to reflect badly on the law firm.

Get the content right, engage with the audience, and start reaping the rewards.

Don’t avoid local customers

When you’re marketing a niche, it can be easy to try and cast a net wide in an attempt to capture every potential customer. This is a possibility depending on just how specialised the niche is, of course, but you shouldn’t lose focus on an important aspect: the local audience

In fact, certain specialised businesses depend on their local customer base. To use an example, a reputed accountant, Liverpool based firm is Alliance Accounting. Despite their reputation and expertise, their main targets are clients that are in Liverpool and Sydney. The reason is simple: people from other areas of Australia are less likely to travel across the country for an accountant.

Listen to feedback

If you’ve created a business from scratch, you might have a tendency to ignore any feedback that goes against your grand vision.

Never do that.

It is fine for you to feel proud and be protective of your company. However, any business needs to listen to its customers. If they have a valid point, require assistance, or are simply there to complain, respond to them. If you do it in a respectful, self-assured manner, this will reflect well on your business and may even turn complainers into loyal customers.

Feedback will also help you to shape your marketing plan. After all, your marketing strategy should be one that’s open to change. Continually refine your approach, and you will be able to reach a more considerable number of targeted customers.

5 Tips To Help Manage Your Finances

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StrategyDriven Practices for Professionals Article |Manage Your Finances| 5 Tips To Help Manage Your FinancesManaging your finances can take time and is a process that needs to be carefully planned as spending habits can be hard to break. But with a simple step by step plan and small changes, you can begin to manage your money and become smart with your finances. To help you out, we have compiled a list of five tips to help you manage your finances.

Make A Savings Account

One of the easiest ways to save money is to begin by making a savings account. This is an account that is sperate from your normal account and can be added to and withdrawn from whenever you need to. Several accounts are available that offer you several benefits with your savings and can act as a tool to help you maintain health savings throughout the course of your life.

Set Yourself A Clear Budget

In addition to organising a savings account, it is important to set yourself a clear budget. This can help you to maintain health spending habits and monitor your monthly spend much more closely. By keeping your budget to a suitable amount, you can then begin to place some money into your savings account. This will aid you in becoming financially stable over time. Though this is not the case at all times, monitoring your finances can help you to begin the first steps to being financially stable. Should you still find yourself struggling with poor finances however there are quick easy loans available online to provide financial aid should you need it in a financial emergency?

Track Spending Regularly

When you have set yourself a budget, it is crucial to monitor your spending regularly. By enlisting the help of a finance app or mobile banking, you can monitor spending closely as you go. This is crucial when taking back control of your finances as it is what is needed to prevent overspending. This is updated daily and allows you to see how much you are sending daily and make changes accordingly.

Save Up For Big Spends

Another way that you can manage your finances more effectively is to save. Savings can then be spent when purchasing items such as technology or cars, this will limit the amount that you are borrowing. Though it will be taken longer for you to have these nice things, it allows you to make an informed decision as to whether it is needed or not. This is commonly known as the 30-day rule and is a simple trick that can get you into the frame of mind of saving.

Use Money When Heading Out Shopping

The final way that you can begin to take back control of your finances is to only use money when out shopping. By getting money out and leaving cards at home, you can monitor spending and ensure that you have exactly that you need to have fun without overspending. This is a simple change to your daily routine that could see you saving money in the long term.

As a result of using some of these top tips, you are likely to see your savings build up and notice that you have disposable income at the end of the month to make ends meet. Where will you start with this process?

How to Handle a Small Business Lawsuit

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StrategyDriven Risk Management Article |Small Business Lawsuit| How to Handle a Small Business LawsuitThere are advantages to owning a small business and endless opportunities for success and growth. Becoming a small business owner is something to be proud of, but there are some risks associated with owning any business. While ideally, it will never happen, a small business lawsuit can be an extremely stressful situation. It’s good practice to be prepared for the worst just in case you find yourself facing a legal situation.

Stats show that each year, 35-56% of small businesses may become involved in litigation. You may not have experience handling lawsuits, specifically business ones, but that’s no reason to fret. Here are a few key things know so you can handle a small business lawsuit.

A claim is not a lawsuit

The first important thing to note is the difference between a lawsuit and a claim. If someone makes a claim against your business, it will only involve your insurance company and does not necessitate you to go to court. If the insurance companies settle the dispute between each other than it doesn’t escalate further. If they cannot reach a mutual agreement, it could lead to a lawsuit. It is also possible for a lawsuit not to make it to court if both sides agree to an appropriate settlement. If it does go to court, make sure always to have a court reporter present to transcribe everything, to ensure that nothing is misinterpreted.

Protect yourself with comprehensive insurance

Your business may never face a lawsuit in all your years of operation. Still, you must prepare yourself should the scenario arise. Proper insurance is critical to make sure that your business is covered as much as possible. The most essential type of coverage you can have is general liability insurance. It will cover you from the most common situations that could arise, such as employee injuries or any other injuries on your business property. Depending on your business operations, you may want to look into more specialized packages based on risks your employees or clients may face.

Make sure your business insurance covers courtroom costs, attorney fees, and settlement fees as well.

Obtain a quality business lawyer

As a small business owner, it is a good idea to have a lawyer on retainer. That way, you know you will have a good quality lawyer you can trust on hand if you end up facing a lawsuit. The last thing that you want to do is scramble to find a good lawyer last minute and not have time to do your research.

The best course of action will usually be a settlement because it won’t require you to go to court. That said, always speak to your lawyer first before saying anything as they will be able to advise you on the best action to take and guide you through the whole process. Even once you speak to your lawyer, you should still avoid any direct contact with the plaintiff. Always make sure that any conversations you have with the person suing you go directly through your lawyer.

Lastly, the best thing you can do after a lawsuit is to learn from it. Use the experience to ensure it doesn’t happen again by making the necessary adjustments in your business.