Perhaps any business will encounter ups and downs throughout its existence. From the thrill of launching and excitement of seeing sales rising to the stress of keeping finances flowing and perhaps even closing your doors permanently, managing your own venture is a rollercoaster ride. This is all part of the fun and challenges you will encounter as a business owner.
However, once you find yourself in the middle of a downward spiral, it can be quite difficult to keep pushing forward. This is especially true if you have no prior experience in business management, or you are unaware of the different options you have to save your business from sinking any further.
If this sounds like you right now, you’re not sure if your business has an existential crisis, or you’re just curious to see how you can fight off potential challenges while running a business, then read on below.
Existential Crisis in Business
An existential crisis in business happens when the company does not reach bottom-line projections, causing losses to trump profit. It is crucial in your business’ journey to either solve the problem to stay afloat or risk shutting down for good.
Signs a Business is in Crisis
When do you know your company is in trouble? Recognise the signs before it’s too late.
1. Frozen growth
Do you find yourself hiring replacements rather than additional positions more often, or perhaps you are not hiring at all? This could be a sign that you’re in limbo, and your company has reached a lull.
Don’t freak out just yet, though, as this might not immediately be a bad omen. There are seasons in a company’s life cycle when you’re hitting your goals while staying efficient at your current size. But it becomes problematic if you’ve been here for a while, or for what seems like forever.
Most companies would want to aim to get more clients, sales, or products out there for their market. If you haven’t been able to grow, and you’re suffering more losses like clients pulling out, dwindling sales, or stale ideas for products, this may turn out to be something that needs fixing.
2. Work delays
If you have seen many delays from your end or cancellations from clients working with you, it could signal that work isn’t getting done efficiently. This could impact the way your business grows and cause more losses.
Note that if the delay isn’t an issue on your end, you don’t have to worry. Instead, evaluate your employees and partners and see what’s causing things to get stuck in the pipeline. If things are freezing up from all directions, this could be a bad sign
3. No paychecks
A huge red flag for the company is if you can’t issue paychecks to your employees or keep giving late payments. When this happens, your business may already be in deeper trouble. What’s worse, your staff will be clued in—there’s no way to hide it.
Not being able to issue a check might be because you have more losses or debt than profit. Either way, giving out late or no paychecks at all is something you should immediately look into.
4. Outdated financial statements
Inaccurate financial statements can wreak havoc on more than just your cash flow. In a 2019 BlackLine and Censuswide survey among business owners, respondents believe that it can damage their reputation (42%), impact their ability to secure capital (41%), and increase debt (40%).
This domino effect can push your business further down the spiral. If you don’t have updated and accurate financial statements, it’s time to take a closer look at what’s happening with your company’s accounts.
5. Miscalculating costs
Continuing from the previous point, if you are having trouble balancing your financial accounts, then it might be because something’s wrong with how you’ve been approaching your business. If you don’t understand your costs, then you won’t know how to price your services accurately and keep your business afloat.
6. Failure to control everything
Feeling helpless, losing a sense of control, and the inability to create a plausible game plan for your business is what you will probably feel once you are at your breaking point. Things could be overwhelming at this stage, with nothing seemingly going right. What was once relatively smooth sailing operations have now become a sinking ship.
How to Survive an Existential Crisis in Business
If you can relate to the points mentioned above, all hope is not lost. Here are some tips on how you can put back the pieces together again and save your business from its existential crisis.
1. Reevaluate business strategy
Wherever you are in your business, it’s worth taking a look at what you’re doing right or wrong. In the case of being in the middle of an existential crisis, it will do you good to clearly identify what strategies have led things to go south.
Having an eye on what your business can improve on will allow you to be more actionable in solving them. For instance, if you’ve had financial statement errors, the first step to your new strategy should be clearing your accounts and getting an accurate picture of where your business is financially.
2. Go back to basics
This isn’t the time to launch into elaborate events that may further bleed your business out. Go back to a tried and tested formula—a way of doing things that you know have worked before, through and through. By going back to the basics, you revisit some earlier strategies that can even inspire new ones that you can implement once everything has stabilised.
During times like this, it’s easy to just throw in the towel and give up. But it is during an existential crisis that you need to beef up your leadership and management skills for the sake of your company and the employees who are counting on you.
The good news is you don’t have to do this alone. With your core team or trusted business partners, you can feel more reassured as long as you establish a clear business plan that can help pull your company through the mud. Keep your fighting spirit alive!
4. Reverse bad decisions
Now that you’ve identified where you went wrong, it’s easier to retrace your steps and undo some of the mistakes you’ve made. Getting a dedicated accounting team to clear financial statements, hiring faster vendors to execute the work for you, getting top talent that can deliver results, and perhaps even taking out a business loan can be some of the things you can do during this stage.
5. Focus on execution
With a plan solidifying by the minute, it’s time to set it in motion. Don’t waste your time dwelling on the what-ifs, and get yourself and your team ready for execution. It helps to create a timeline during your execution stage, too. Being organised will help you achieve your goals faster.
6. Invest in people
Last but not least, put faith in your people. You may be managing the business, but this is not all on your hands. In some cases, companies start to enter crisis mode because of bad hires—so investing in the right people will not only save you now but in the long term.
Prepare for the Road Ahead
Every business will have its rough seasons, so if you find yourself in this scenario, remind yourself that all hope is not lost. Recognising the signs and implementing a plan will ensure you get out of this mess in no time.
If you see yourself in this rough situation, you have to act fast. Getting funding for your business is easy with Earlypay, your invoice finance partner in Australia. Cash in those unpaid invoices and use the money to propel your business away from sinking further. If you have more questions about this service, simply get in touch with Earlypay, and the team will be happy to assist you.