What to do when your company is in financial difficulty

Every entrepreneur runs risks. Sometimes you end up in a situation where problems pile up: turnover drops, customers don't pay on time, fixed costs keep rising, and before you know it you're busy surviving instead of doing business. You're in a crisis situation — financial, mental and business. But a crisis does not have to mean the end. In many cases, recovery is possible, provided you act quickly and take the right steps. In this blog you can read how you, as an entrepreneur in difficult times, can regain control of your finances.

When do you speak of a crisis situation as an entrepreneur?

Not every setback is a crisis. But when multiple signals occur simultaneously, it is time to sound the alarm. Common signals include:

• You can no longer pay bills, staff or taxes (on time).
• You postpone payments, but the pressure continues to increase.
• You are making structural losses, despite efforts to reverse this.
• You receive reminders, collection notices or are at risk of having your utilities disconnected.
• The stress is so great that it affects your daily functioning.

Do you recognize several of these signals? Then you may be in a financial crisis. Waiting makes the problem worse — action is needed.

How do you get into a crisis as an entrepreneur?

A crisis often does not arise from a single cause, but from a combination of factors. Think of:

• External Influences such as a pandemic, economic recession or wars that disrupt your supply chain.
• Staff absence or illness, which means your company can temporarily deliver less.
• Too fast growth, where your fixed costs or investments increase faster than your income.
• Responding too late to declining sales or changing customer behavior.
• Insufficient reserve for taxes or unexpected costs, which means you suddenly have to pay large amounts.

If you do not have sufficient financial buffer or a plan B, these situations can escalate into a crisis.

What can you do when you are in a crisis?

When your business is in trouble, it’s crucial to take the right steps quickly. Here are 5 practical actions you can take today:

1. Create an instant overview

• List all your outstanding invoices, tax debts, loans and fixed costs.
• See what income you can still expect.
• Determine the minimum cash flow required to stay in business.

2. Make an emergency plan

• Temporarily cut non-essential spending.
• Consider a temporary freeze on major investments.
• Set priorities: who do you absolutely have to pay first (e.g. staff, rent, tax authorities)?

3. Talk to creditors

• Contact suppliers, banks or landlords and explain your situation.
• Request a temporary payment deferral or a staggered arrangement.
• Do this in writing and by telephone — be open and professional.

4. Take a critical look at your revenue model

• Which products or services really deliver?
• Can you quickly acquire new orders, gain extra margin or simplify what you offer?
• Are there any side activities that can quickly generate additional revenue?

5. Get help in time

• Don't wait until the water is really up to your lips.
• Experienced debt counselors can help you organize your situation, negotiate with creditors and build a realistic recovery plan.

Is debt assistance for entrepreneurs in crisis an appropriate solution?

Yes. Debt assistance is not only for entrepreneurs who are about to stop, but also for entrepreneurs who want to save their business. A professional debt counselor:

• Provides a clear overview of your debts.
• Negotiates with creditors about reduction or postponement of payments.
• Helps you create a viable business plan.
• Assists you with a restructuring or – if necessary – a controlled termination of a business.

Often more is possible than you think — provided you sound the alarm in time.

 

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems escalate and take control of your financial future today. Click on the button 'Request debt assistance now' and take the first, important step towards peace and security for you and your company.