Understanding, and even anticipating, the causes of a financial crisis is the first step to overcoming it and protecting the business from future ones of a similar nature. A financial crisis can be caused by both internal and external factors, such as conflicts of interest, poor governance, or, as is the case with the COVID-19 pandemic, a global health predicament that caught some business unaware and unprepared.
If there is one lesson that the COVID-19 pandemic has taught business owners and entrepreneurs, it is that they must plan for and enforce strategic short and long-term solutions to be able to successfully navigate and overcome financial challenges.
The COVID-19 pandemic is an example of an external factor that may lead to a financial crisis.
Business owners need to analyze all existing expenditures, and determine how they can reduce non-essential costs. Think about it - are you working with the best, most cost-effective suppliers? Are you pricing your products and services correctly? Can production costs be reduced by changing suppliers? Answering these questions can help you prioritize your essential expenses, and take steps to reduce and eliminate the not-so-important items.
Aside from reducing expenses, organizations also need to cut down on time-consuming and manual processes, as these are less efficient, and can prove to be expensive in the long run. Is there a possibility that certain tasks may be automated or outsourced? If so, you may consider doing so, to reallocate the expenses being allocated for manpower and utilities to other more essential resources.
Because there may be lesser profit coming in, business owners need to curtail any unnecessary spending in order to stay afloat. Aside from streamlining costly procedures, payments for purchases that are not business-critical must be thoroughly reviewed to ensure that these are necessary. To prepare for a financial crisis, the business’ operating budget should be allocated only to things that can yield more profit, such as operations, and sales and marketing. Expansion plans must also be put on hold unless there is an assurance of immediate and significant gain.
Strict monitoring of cash flow will be vital in overcoming potential challenges. Moreover, having a clear view of profit and loss will allow business owners to craft viable strategies for growth and survival.
When a financial crisis hits, business owners must evaluate and redo their sales strategies to be able to adapt to the times. With the COVID-19 pandemic, many businesses turned to online sales and digital marketing, which turned out to be a sound decision.
According to a survey conducted by Rakuten Insight in the Philippines, 63% of the consumers they asked have increased their online shopping activities, due to the lockdowns enforced by the government.
Aside from observing the above-mentioned steps, it is also important for any business owner to stay on top of his game, with the help of the right life insurance and investment policy. There are different kinds of insurance policies available for business owners so make sure to research on which product can adequately provide for your respective needs and requirements.
Securing a variable unit life (VUL) policy, which effectively combines coverage and investment in one product, can help entrepreneurs seize and maximize profit-building opportunities, while ensuring that their dependents are well provided for, in the event of unforeseen circumstances.
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These are four of the best ways how Maximal Power lets businesses not just survive, but thrive, in times of crisis. Allianz PNB Life will work with you to guarantee that you get the best out of your investments, and maximize your wealth.
Allianz PNB Life has proven itself to be a reputable and trustworthy financial services partner, serving customers in over 70 countries. We began our operations in 2001, and have since grown to become among the major life insurance providers in the Philippines. We look forward to protecting you while helping you grow your wealth.
Overcoming a financial crisis can be tough. But with the proper preparation, the right information, and the best ally by your side, it can be surmounted. Click here to be in touch with any of our fund managers today.