All owner managers are aware that running a small business is not always smooth sailing and numerous different factors can impact its financial performance. However, by taking into account three key areas, time, communication and trust, decision makers stand a stronger chance of overcoming industry challenges and maintaining a viable business.
If you were to ask owner managers what the most valuable commodity during times of financial stress was, most would probably say cash. However, time is the most crucial currency for struggling businesses, as it gives owner managers the ability to keep their options open. Options such as refinancing the business, the sale of the company or its assets, downsizing or relocation all have the potential to provide an exit route from a difficult scenario, but all require time to set the wheels in motion.
One way to gain more time is often through effective communication with key stakeholders. It can be difficult to break the news when things aren’t going well, and people’s instinct may be to hide away. However, if owner managers cannot make immediate payments, suppliers are more likely to understand if they’ve been notified that the business is working towards a solution.
Timely and open communication in difficult times also generates trust and can aid owner managers to buy some much-needed time. For example, if they inform a supplier that it will not be possible to make a payment this month, they will most likely appreciate a commitment to pay them on an agreed date the following month. However, it’s important to acknowledge that trust is delicate and can easily be shattered by not following through on agreements made. However, if owner managers can keep lines of communication open and stick to their word, the supplier relationship benefits from greater flexibility in times of need.
The world of owning a small business has no guarantees of success and the current trading environment is particularly unpredictable. Nevertheless, by keeping the three golden rules of time, communication and trust in mind, owner managers will be more likely to build a financially sustainable company.