Listed in: Finance & tax Selling & succession

Business continuity & contingency planning to avoid cash crisis

If the viability of your business is at risk and you’re considering what to do next, here are three options you could consider.

3 minute read

If you find your business in a cash crisis, the first question to ask yourself is ‘how bad is the situation?’ If you removed the immediate problem would the pressure disappear, and does the business have a real long-term future? If access to money is the main issue, and the core demand is still sound, then here are three strategic options you might consider.

1. Trading out of trouble

Initially you might prioritise your repeat customers to make sure they have all their needs met, and see if there are any additional needs to you can meet by up-selling or cross-selling. Then you could contact the rest of your customer database with phone calls, emails, physical or virtual visits, social media, or e-newsletters with special offers to cross-sell or up-sell to other product lines.

Next, look for wider opportunities to increase sales as some industries or markets will be doing better than others. There are a number of ideas you could investigate including:

• approaching new customer segments
• diversifying by branching into new products and services
• moving parts of your business online
• marketing in regions traditionally outside your area
• selling through online marketplaces
• using social media sales platforms
• partnering or collaborating with other businesses.

2.  Restructure your business

You could think about the parts of your business that work and reinvent or restructure the areas of your business that are struggling to adjust to the new normal. Take a close look at what can be salvaged and then act like a new start-up to help build a new, stronger business on the foundations of the old one. What would you do differently, and how would the business look?

You may want to:

• delete unprofitable product or service lines
• close down parts of the business that no longer contribute
• sell or lease assets not needed
• change the expertise mix of your staff
• invest in new research and development.

It might be worthwhile establishing one or more identifiable target markets and then designing your business around providing an exceptional service offering in that area. Customers will still need to know what is special about your business to set you apart from your competitors, so try to differentiate with unique products and services.

If you decide to restructure, ensure any change in personnel is right for the business, and human resources legal advice is sought on correct process where any people changes need to be made.

3. Sell and move on

If options one and two aren’t viable for you, then you might consider it is time to move on. If you’re thinking about selling your business, it’s crucial to first work through the details that will help you maximise your price and make your business more attractive to potential buyers.

To reduce the risks involved in selling a business, consider employing experts like a business broker to help guide you through the steps. They will help prepare the business to sell, put the business on the market within their channels, through to completion of the transaction and handover.

It’s a good idea to talk to your accountant, lawyer, banker, business partners, family, or other business owners you rely on to help with your future business decisions.

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This content is for general information purposes only and does not constitute, and is not intended as, personalised financial, legal or tax advice. BNZ recommends that you seek advice specific to your personal financial, legal or tax situation from a qualified adviser. Neither BNZ nor any person involved in the content accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.