At least business owners need to make a lot of extreme decisions at times of crisis so they can survive. Very often they do not even know whether they will be able to resume their economic activities at the end of this fiasco.
In light of this, the question that arises is: how do you manage a company at times of crisis?
Do not worry if you have also wondered about this because we are going to guide you through this process.
We have prepared this article with 6 fundamental tips for managing companies in times of crisis . Continue reading and learn which best practices to follow to face this and any other turbulent time.
6 tips on how to manage a company in times of crisis
The idea that crises are opportunities can be a trap . Before you venture into risky new strategies, keep your feet firmly on the ground.
1 – Rethink your business planning
Starting with our tips on how to manage a company in times of crisis, it is essential that you reevaluate your current sales planning .
This is an extremely necessary practice in difficult times, as the actions and goals set out in the original plan may not be applicable at all in the new crisis context.
Therefore, diagnose your business and rethink your business planning and strategies. This way, you will be able to avoid losing customers and reducing revenue.
2 – Seek to reduce the need for working capital
The second measure for companies in times of crisis refers to working capital .
In short, working capital works as a cash reserve that the company has to maintain itself in the periods from purchasing its inputs and paying expenses until receiving its sales.
Reducing the capital requirement means shortening this period . In other words, the cash cycle needs to be shorter. By doing this, you receive money sooner and can pay it back later.
To do so, look for:
- avoid granting very long deadlines for your payments;
- avoid keeping excess stock;
- try not to extend the payment deadline to your suppliers.
3 – Analyze your current investments
Analyzing your business’s current investments is a great way to help companies navigate times of crisis. When you do this, you can identify which investments are yielding little return and should be discontinued .
But the crisis doesn’t mean you shouldn’t invest in anything. Also consider other more profitable possibilities, with the potential to yield good results in the medium and long term. That way, when the crisis is over, you won’t be completely financially helpless.
Knowing indicators can be of great help at this time, see some of the most important ones.
4 – Be careful when applying for credit
Another fundamental tip on how to manage a company in times of crisis refers to requesting loans.
But still, it is during critical economic moments that entrepreneurs commonly look to financial institutions so they can obtain lines of credit in order to facilitate paying salaries and keeping their companies afloat.
Interest rates charged and terms, however, are extremely sensitive to pay attention to to avoid your debt from spiraling.
5 – Reduce your costs intelligently
In every crisis, sooner or later, the entrepreneur finds himself forced to drastically reduce his costs. He then ends up laying off employees, reducing production, selling equipment, etc.
Although these are legitimate and understandable decisions in a time of crisis, it is important that they are made rationally and intelligently . So, instead of adopting desperate measures to reduce your operational and administrative costs, stick to the numbers.
Therefore, take stock of your expenses, observe your current processes, project your income and decide where to cut objectively.
6 – Evaluate the prices charged
Concluding the tips for companies to take in times of crisis, try to carefully evaluate the prices of your products and services .
It is not uncommon to see companies that, in order to survive during a crisis, end up significantly reducing the prices of their solutions due to the drop in demand.
This may not be a good idea. This is because reducing prices could seriously compromise your cash flow and make it difficult to meet your other financial obligations.
The solution to this impasse is to understand your market and the pricing policy it practices, as well as the value that your audience is willing to pay.
These were our 6 fundamental tips on how to manage a company in times of crisis. Put them into practice and you will be able to survive difficult times.