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Well… almost never!  In common with most problems, the key to ensuring that it is not too late is to identify and acknowledge the cause of your problem – not just the symptom.  Let’s assume, for the purposes of this article, that your problem revolves around cash flow (or lack of it).

There are infinite reasons why cash flow may be less fluid than you would like. Let’s concentrate upon the two most common issues.

The first obvious cause of cash flow difficulties is, of course, that you are not making a profit and ignoring this sort of problem can have serious repercussions as you sink deeper and deeper into the abyss of growing debt.  There are only two ways to reverse a loss-making situation – increase sales or reduce overheads. 

The many ways to fill an empty venue or encourage existing customers to spend more should be the subject of another article. However, if filling the place up is not your problem, but rather a lack of capacity, the solution to your problem could well involve borrowing more money to expand.  Your bank manager or a specialist broker should be able to advise you of your options.

Controlling overheads starts with maintaining proper financial records.  If you don’t keep detailed records, you should start now (an accountant is usually the best person to do this, although you may feel sufficiently proficient with a computer to do so yourself).  You then need to closely scrutinise each and every operating cost and consider how a saving can be made.  That may entail renegotiating terms with your suppliers, cutting back staff hours or even casting away a few personal luxuries.

If your underlying business is profitable, the burden of servicing debt repayments, hire purchase agreements etc. is probably draining cash reserves.  The solution to this particular difficulty might be as straightforward as consolidating your debts into one loan, repayable over a suitable period to make the instalments manageable.  If you have a good enough track record with your bank and have maintained proper financial records (that demonstrate the profitability of your business) then such a refinance exercise could be as simple as a half-hour chat with your bank manager.  Failing that, there are many other ways in which a restructuring exercise can be implemented.  Such an exercise may be possible simply against the strength of your existing business asset/s or, in some circumstances, may require further collateral from the equity in your home or perhaps from a guarantor.  Speaking to a specialist finance broker will help you to identify the various options that are available.

Ultimately, and if all else fails, you may have to face up to the fact that you simply cannot generate a satisfactory profit from your business.  You should consider selling sooner rather than later, as the longer you leave it (and the more loss-making records that you have), the less of your original investment will be recouped.  Consult at least two or three specialist agents before instructing one.



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