- Get started with computers
- Learn Microsoft Office
- Apply for a job
- Improve my work skills
- Design nice-looking docs
- Getting Started
- Smartphones & Tablets
- Typing Tutorial
- Online Learning
- Basic Internet Skills
- Online Safety
- Social Media
- Zoom Basics
- Google Docs
- Google Sheets
- Career Planning
- Resume Writing
- Cover Letters
- Job Search and Networking
- Business Communication
- Entrepreneurship 101
- Careers without College
- Job Hunt for Today
- 3D Printing
- Freelancing 101
- Personal Finance
- Sharing Economy
- Decision-Making
- Graphic Design
- Photography
- Image Editing
- Learning WordPress
- Language Learning
- Critical Thinking
- For Educators
- Translations
- Staff Picks
- English expand_more expand_less
Money Basics - Financial Problem Solving Strategies
Money basics -, financial problem solving strategies, money basics financial problem solving strategies.
Money Basics: Financial Problem Solving Strategies
Lesson 2: financial problem solving strategies.
/en/moneybasics/why-financial-literacy/content/
Financial problem-solving strategies
Have you ever experienced a financial problem? Do you feel like finances are holding you back from reaching your goals? This lesson will give a brief overview of the general problem-solving process and how to apply it to the most common financial problems.
The problem-solving process
First, let's take a look at a general problem-solving process that you can apply to any situation, not just a financial one.
- Identify the problem . The first step in solving a problem is to identify it. What exactly do you need to overcome?
- Make a plan. What are the steps you need to take in order to overcome the problem?
- Implement the plan . This step actually puts the plan you created in place. While it sounds fairly straightforward, this is usually the most difficult step.
- Evaluate the plan . Although this is listed last, this step might actually occur simultaneously with implementing the plan. Things happen and circumstances change, so you may need to re-evaluate your plan as it is happening.
Identifying the problem
The first step in the problem-solving process is to get to the root of the problem and understand what you need to overcome. Here is a list of the most common financial problems people may face:
- Lack of income/job loss
- Unexpected expenses
- Too much debt
- Need for financial independence
- Overspending or lack of budget
- Lack of savings
When thinking about these common problems, each one falls into one of three areas: You need more money, you need to reduce your debt, or you need to change how you spend.
Making a plan
After identifying the problem you need to overcome, it's time to make a plan. Not sure where to start? No worries! We have you covered with some tips and places to begin.
Problem 1: You need more money . Whether you've lost your job, met an unexpected expense, or are working on becoming more financially independent, a form of income is necessary.
If you are a looking for additional work or maybe just a better-paying job, take some time to update your resume and cover letter. Make sure they are neat, up to date with your most current information, and free of spelling and grammar errors.
Be wary of any advertisements or jobs that offer fast, easy money. A lot of quick-cash methods come with unintended consequences. More often than not, if something sounds too good to be true, it probably is.
Problem 2: You need to reduce your debt . With high interest rates or the need to live paycheck to paycheck, high debt can be debilitating. Sometimes it feels like climbing a neverending mountain with an invisible peak. However, by prioritizing and negotiating your debt, you can make it more manageable.
Try listing all of your debt and the interest rates associated with each. Focus on paying off the ones with the highest interest rates first. If you're having trouble making payments, call the loan company and see if it can offer any solutions for you. The company may be able to lower your interest rate or offer a temporary forbearance to help you get back on your feet. If you need more help tackling your debt, you may want to contact a professional debt counselor like Consolidated Credit.
Problem 3: You need to change how you spend . Going from financial problems to a healthy financial status often requires organization and a shift in thinking. Avoiding overspending, building your savings, and gaining financial independence can often be accomplished with good spending habits.
The first thing you may want to try is creating a budget. There are many templates and resources available to help you create one. Sticking to one can be challenging, but simply having a budget laid out can help you see where you need to start spending less.
In addition to your budget, create a savings plan. Start out small. Even stowing away an extra dollar or two here and there can make a big difference. Also, try placing your savings in a place you cannot easily access. For example, create a savings account at a bank you don't usually use. The more difficult it is to access your money, the less likely you are to spend it.
Implementing the plan
Although the explanation of this part is the simplest, this is often the most difficult part to actually execute. It requires self-discipline and perseverance. The most important part of this step is to know that if your plan doesn't work or if you have a difficult time sticking to it, all is not lost. If it happens, move on to the next step, evaluate your plan, then repeat the process.
Overcoming financial obstacles can require changing your lifestyle, and this does not happen overnight. However, just having a plan itself can help to give you confidence and reassurance that you can eventually overcome whatever is in your way.
Evaluating your plan
As you implement your plan, you'll need to continually evaluate it. Maybe something happens and your original plan needs to change. Perhaps you've learned more along the way and realize that your original plan was incomplete. Or maybe your first plan went as planned and was a success. No matter the circumstances, it is always a good idea to look back and re-evaluate. Try answering these questions:
- Was your problem solved? Did a new problem arise?
- What went right?
- What went wrong?
- What circumstances changed?
- Was there anything you didn't account for?
- What was easy about implementing your plan?
- What was difficult about implementing your plan?
Financial obstacles can often seem debilitating and impossible to overcome. They often create a significant source of financial anxiety . We hope this lesson will help give you the confidence to take on your problem one step at a time so you can conquer your anxiety and move forward.
/en/moneybasics/assessing-how-you-manage-money/content/
- Educational Resources
- Business Solutions Articles
Financial Management
5 Common Financial Problems That Small Businesses Face
Surviving as a small business was challenging even before the coronavirus pandemic, with only about half of small businesses keeping their doors open for at least five years and only about a third lasting 10 years.
The pandemic has worsened already challenging conditions, per a recent Small Business Pulse Survey by the U.S. Census Bureau, which gauges the impact of the pandemic on small businesses.
Only 28% reported they had enough cash on hand to operate for three months. And nearly 50% expected it would take more than six months for business to return to the level it was at a year ago. Nearly 80% have requested Paycheck Protection Program (PPP) loans .
Every four years, the National Federation of Independent Businesses (NFIB) surveys small businesses as part of its Problems and Priorities Survey . It just released its 2020 results, collected right before the U.S. economy really began feeling the impact of the coronavirus. Results point to some prominent problems—such as financing—that will likely worsen post-pandemic. Other issues include customer loss, the cost of health insurance and finding qualified employees.
5 Common Financial Problems that Small Businesses Face
1. loss of customers.
Customer retention is a perennial concern, and tracking retention and churn rates is a good way to measure the effectiveness of different tactics to minimize customer loss . Mixpanel analyzed anonymized data from 1.3 billion users to come up with benchmarks for customer retention and found the average eight-week retention rate across industries is 20%.
To calculate retention rate , take the number of customers at the end of a certain period and subtract the number of customers acquired during that period. Then divide that number by the number of customers at the start of the period, and multiply that by 100 for a percentage.
Small changes in retention rate can make a big difference in profits. An oft-quoted Bain & Company statistic says that by increasing customer retention rate by 5%, a business can increase its profits by 25-95% .
To increase customer retention, look at ways to increase customer loyalty , as the cost of acquiring new customers is much higher than keeping existing ones. Tactics include instituting loyalty programs, offering customers exclusive discounts and developing easy ways to solicit feedback from customers. Make sure you’re connecting with clients frequently so you can address any concerns quickly.
2. Pressure from Credit Sources
The most common source of capital to finance business expansion is personal and family savings, followed by using the business’s profits and assets, getting business loans from financial institutions and obtaining business credit cards.
The Federal Reserve Banks’ Small Business Credit Survey (SBCS) shows that securing credit and making payments on debt are the second- and third-biggest financial challenges, behind paying operating expenses (including payroll). The most common types of external financing for small businesses are loans and lines of credit.
In that same survey, small businesses owners reported they most often use a personal guarantee to receive financing, with 88% relying on an owner’s personal credit score. Additionally, 86% of firms said they would need to find new funding or reduce costs if their business didn’t see revenue for two months. In that scenario, 46% of companies that had applied for financing in the past 12 months would likely take out additional debt.
What’s more, some 40% of firms surveyed by the SBCS were already holding outstanding debt of up to $100,000. And that’s before the pandemic hit.
One of the major ways small businesses have been able to protect jobs is with cash influxes from the PPP, loans that the government will forgive as long as certain conditions are met . While there is no data on the companies that applied for loans under $150,000, data from the Small Business Administration said PPP loans have supported 51.1 million jobs, or up to 84% of all small business employees. The average PPP loan was for $107,000, and 85.6% of all loans were for less than $150,000.
One way small businesses can ensure they don’t take on more debt from this program than expected is to diligently and accurately track expenses covered by the loans, so they have the documentation to prove where they spent the money.
3. Repeated Loan Refinancing
Another way businesses may look for cash is by refinancing loans.
When the business took out its first loan, the terms may not have been as favorable as they are when the organization has been making money for a few years. For business owners who have improved their credit scores, increased revenue or increased the value of assets, LendingTree says refinancing a loan may be a good idea. Rates could be more favorable and payments will be lower, which means more cash the business can use.
It’s no wonder, then, that the Federal Reserve’s SBCS survey revealed 30% of those seeking financing are doing so to refinance or pay down debt, with most seeking amounts between $50,000 and $100,000.
While refinancing is a common practice, doing so to cover operating expenses could signal trouble. If a small business owner used their own credit score to secure a loan, refinancing debt will lower that person’s credit score, possibly affecting their personal financial standing. Small business owners also need to consider whether there are penalties for paying off the old loan early. If those penalties outweigh the benefits of refinancing, it’s not a good idea.
While a borrower may refinance in order to shorten the loan term, this is unlikely to be the case if the goal is to reduce monthly expenses. The benefits of a lower interest rate are partially offset by an increase in total debt, as refinancing fees are often added to the total owed. Depending on the size of the debt, how much lower the new interest rate is and the company’s objectives, refinancing will likely extend the duration of a loan, or at best retain the current payment schedule.
4. Human Capital and Staffing Issues
This month’s NFIB Jobs Report showed 33% of businesses have at least one unfilled position, up three points from the previous month. Pre-coronavirus, small businesses said finding qualified labor was a top challenge in the NFIB’s Problems and Priorities survey. This was especially true in the construction and manufacturing industries.
The biggest related problem small businesses have—and have identified as their top financial challenge for decades—is the cost of health insurance. It was No. 1 across every industry in the NFIB survey, which noted insurance costs have risen 43% over the last decade, outpacing both inflation and wages. Small businesses struggle to provide the health care packages larger businesses can and have resorted to shifting more of the costs to employees.
Generally, an individual will stay with an organization if the pay, working conditions and developmental opportunities are equal to or greater than the contributions (e.g., time and effort) required of the employee, per the Society of Human Resources Management (SHRM). Therefore, health insurance is a huge motivator in employee retention. Small businesses looking to control costs can negotiate for lower rates, shift to individual plans or look for plans on the Small Business Health Options (SHOP) exchange.
5. Poor Work Environment
SHRM says one in five Americans departed a job in the past five years because of poor company culture, and it estimates that turnover cost businesses a grand total of $223 billion—the most important factor to a strong company culture is the employee’s manager, followed by meaningful work and flexibility, commute times and professional development.
A “poor work environment” can also refer to one that is physically unsafe or enables harassment. Small businesses must be mindful of Occupational Safety and Health Administration (OSHA) requirements that organizations with 10 employees or more must follow. Adopting an effective safety and health program can save $4-6 for every $1 invested.
And employees can feel unsafe in their work environment for other reasons. According to the Equal Employment Opportunity Commission (EEOC) , retaliation continued to be the most common charge filed with the agency, followed by discrimination based on disability, race and sex. The EEOC shares tips for preventing and handling common workplace issues, which can be costly to small businesses.
#1 Cloud Accounting Software
How Financial and Accounting Software Can Help Solve Financial Problems
In preventing all of the above issues—or catching them before they become bigger problems—the organization needs to see and understand how cash is moving in and out of the business, and have total confidence in those numbers.
Accounting software gives companies visibility into all their revenue and expenses and allows them to track and analyze key financial metrics over time. Additionally, this software can automate accounts receivable processes to help reduce days sales outstanding and increase cash flow. It also helps business track bills and make the most of their payment terms to optimize accounts payable management, all while maintaining strong relationships with key suppliers. Finally, accounting software makes it easier for companies to provide financial statements and other essential information required to secure financing—or qualify for PPP loan forgiveness, to use a current example.
Having automated accounting processes also helps small business hold on to a very important part of their team—those in the finance organization. Robert Half’s 2020 Salary Guide said demand is high and supply is low for accounting and finance professionals in the U.S. Companies are holding on to good people by providing better pay, perks and advancement opportunities than competitors. With many mundane accounting tasks automated , accounting and finance team members can refine other skills, such as critical thinking and communication. And with a cloud-based accounting system, they can further improve on one of the most in-demand technology skills for accountants: proficiency with cloud-based systems.
Building a Finance and Accounting Team for a Small Business
Every small business needs an accounting and finance function. How many people are on that team and what their jobs entail depends on the size of the business and the…
Trending Articles
Learn How NetSuite Can Streamline Your Business
NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there’s continuity from sales to services to support.
How is your business adapting to change?
Before you go...
Discover the products that + customers depend on to fuel their growth.
- Our Services
- Advertise With Us
- Explicit Success Scholars (E.S.S)
Explicit Success
Building Extraordinary Intellectuals & Success-driven Minds
16 Ways To Overcome Financial Problems In Business
16 WAYS TO OVERCOME FINANCIAL PROBLEMS IN BUSINESS
Running a business is not an easy task, especially if your business is still a startup. It requires the touch of good entrepreneurial skills and more importantly, great marketing skills.
Since the primary objective of any business enterprise is to make money, you probably want to know how to overcome the financial issues your company might be facing.
Maybe your company can’t raise enough capital to actualize a project, purchase some important equipment or pay employees salary…
You need to find a way to cut back on your spending. Yes, you need to increase sales and start managing your finances better in the future.
Before you start thinking about that again, you need to look at the short term. You need to find a way to keep the business afloat enough to actually make those changes.
This means you need a fast cash injection. If you can’t find the money that you need to cover your overheads, you won’t survive long enough to improve the business .
Is your business really struggling with financial problems and you need quick cash? Here are some of the best ways to find it.
1. Restructure Your Business Plan
Once you have gotten the proper education on how to handle your company finances, it is time to make some changes to the business structure.
If your business has been experiencing this constraint for a long time, it is probably due to a faulty business structure that needs to be repaired.
You need to evaluate the weakness in your business that might have led to reduced profits, recurrent expenditure or a recent expansion. This could cause some serious financial drain on your business, and you must identify what it is.
After you must have discovered your business vulnerability, it is time to appoint project managers that are capable of handling their departments.
If you are running a smaller business, you could eliminate the weakest link in your business and focus on your company strengths.
Also, when you appoint task managers, it helps your business work as an effective system.
That way, more work can be done faster and easier. A business that is not operated as a system is bound to hit rock bottom soon.
2. Check your inflows
If your company is having problems with cash inflow, then you might have a very serious problem in your sales department.
Without incoming money, there is no capital, funds, insurance and you might not be able to afford staff salaries.
You need to pay close attention to your cash inflow.
Concentrate more on debts owed by clients as this is usually one of the main causes of financial difficulties. You need to have an understanding with them on due dates.
You must also take good account of your inventory, you do not want to be buying more than you are selling.
If your financial situation is really bad, I would suggest that you wait until you sell off your current inventory before you make another order from your suppliers.
If you produce your own goods , and you currently have one product in abundance, simply stop its production and focus on another good.
3. Construct Your Expenses
This is very important because it helps you plan ahead.
If you have some payments that need to be made at the end of the month, it is wise to organize them according to urgency and work towards paying them.
You do not want to start scrambling for funds at the end of the month, searching for ways to pay debts.
Some businesses have unnecessary expenses. You must organize your list to eliminate this kind of expense.
Another way to boost your business profits is to find cheaper resources, find new suppliers or negotiate a better deal with your existing supplier.
You might even have to cut back on labour costs, which means you might have to do the unpopular and let go of some employees. This is however more reasonable than making them work and owing them salaries.
4. Use Your Own Money
If your company is on the brink of collapse, you might need to take more stringent measures like investing your personal money into the business.
One of the most obvious ways to get more cash, if you’ve got enough in the bank, is to put your own personal money into the company . If you are confident that you can turn the business around successfully and make it profitable, you could put your own money into it for now. Once things are a lot more stable, you can recoup your investment later.
However, I would only advise you to do this if you are the owner of the business. Also, invest small amounts first to fill in the small gaps in the business until it can properly fund itself again and stand on its own. That’s why it’s necessary to save ahead for the rainy days. Piggyvest can help you achieve just that manually or automatically.
It’s ok to fund the business yourself at this point but if things still don’t improve, you don’t want to make it a habit, otherwise, you’ll spend your entire life savings on a lost cause. Sometimes it’s best to admit that the business isn’t going to work out and cut your losses.
It’s important that you understand that there are risks involved here and there is always the chance that you won’t get your money back and the business will still fail.
Get free tips and tricks that will help you to achieve success faster 😉
5. Increase Your Customer Base
Like I previously said, the main initiative of a business enterprise is to make profits.
You cannot have a steady inflow of income without customers buying your product. You must encourage customers to buy and patronize your services.
However, make sure your contact with a customer doesn’t just end with him/her buying your product. Engage them for after-sales services your business might be offering.
Also, you must try to expand your customer base to accommodate more people. Focus on your company strengths and publish your business discounts as adverts on TV stations, radio stations, and billboard adverts.
You must concentrate on your sales and marketing department to effectively increase sales, customer engagement and help get your business out of the financial loop.
6. Sell Some Assets
You would be surprised at the unnecessary expenses your business have been making, once you hire a financial accountant. You might even find out that there are so many assets your company may have stopped using.
If your business has more than two supply buses, consider selling off one of those buses and buy a smaller vehicle.
Take a proper inventory of your warehouse to make sure there aren’t any equipment lying fallow.
If there is, I think you should sell them off and acquire enough money to settle your business debts or purchase more useful items.
If you run a bigger company, ask for a complete list of company assets and go through them one by one, while you carefully grade their importance at this crucial time.
Also, get rid of anything that is costing your company too much like employees staying at expensive hotels while on business trips.
7. Have A Tight Budget
Due to the current situation in your business, you might want to cut back on a lot of luxury .
You might want to recall some official cars you might have given to your employees, change the official accommodation of your employees to a cheaper one.
This will most certainly upset your workers but you must take your time to explain to them where the business is at this time.
Do not attempt to hide this problem from them, this will only just make things worse. Business trips should be on a budget, economy ticket and cheaper hotels.
However, once your employees know that they have a part to play in bringing the company back up, they will put in their best.
8. Increase The Price Of Your Goods
This might seem to look like you are taking advantage of your customers. However, if you do it the right way, you could increase the price of your products or services, and still, provide an added incentive that will be commensurate.
This could also be a good alternative if your business is facing financial problems due to the rising cost of production.
However, make sure your costs complies to the price set to encourage customers to buy.
9. Set Up An Online Store
Since most businesses, these days, are done online, you might want to consider moving your business online as well.
This will help increase your customer base to a considerable amount. You can also give them additional payment options that won’t require them moving out of their comfort zone.
This way, you can reach more people and also earn extra money to keep your business afloat. If you own a store, consider opening a beautiful online store where your customers can shop from comfortably. Have the items delivered to them for a small delivery fee.
If you lack the manpower to properly execute home delivery, consider outsourcing. Hire the services of a delivery company.
10. Invoice Financing
It’s so frustrating when you’re running out of money. However, if you’re to get a few big invoices in the near future, I can give you an idea.
You should look into companies like BCashflow Positive who offer invoice financing services.
They will pay you the majority of the invoice upfront. You can repay them later when the customer pays you. It’s a good way to deal with unpaid invoices and get the money that you need right away. Therefore, your operation is not affected.
11. Find Investors
Finding investors that are willing to back your business is one of the best ways to give yourself a cash injection. This is because they will also be able to advise you on how best to turn the business around.
However, convincing people to put their money behind a business that is already struggling is going to be difficult.
But as long as you put together a good presentation and outline a plan for turning the business around, you should be able to convince them.
If you have a big project to do & your business cannot afford it, you can ask for family or friends to invest.
This is a friendlier approach since it’s family. The pressure to pay back wouldn’t be as much as collecting a bank loan.
It is important that you keep your promise of returns so they can come through for you in the future.
Find the extra money you need to cover your overheads for the next few months & get a much better chance of turning things around.
12. Check Your Energy Consumption
You need to focus on ensuring that you are not using more energy than you strictly need to. Finding ways to reduce your energy consumption is something that you can always do, and which should be easier than you think.
The first place to look is by making sure that you are not wasting energy in any overly obvious ways. If you usually leave the computers turned on overnight, you should stop doing this as soon as you can. You will also find that putting your lights on timers can save a lot of energy in too.
13. Reduce Your Water Usage
Many people forget that water is something that needs to keep an eye on too. The truth is that it is one of the most precious materials on the planet. The less we waste water, the less likely it is that we propel our planet into further turmoil.
You might not have considered really paying attention to the water usage in your business , but if you do so you will help to make things a lot better in a small space of time. What’s more, it’s easy enough to do.
You might even want to think about having water tanks from a water tank supplier to be able to catch rainwater which you can then purify and use. This is inexpensive and is the kind of thing that can add up to make a huge difference.
14. Partnerships
Have you thought about your partnerships? It’s important too that you make sure you do business with other companies who are financially prudent. If you want to overcome financial problems, make an effort to learn from others. Be partners with companies whose values and objectives align with yours.
If you keep doing business with a company without financial prudence, you will eventually believe in such a system too. By focusing on discouraging that kind of behaviour within your industry , you will be surprised at what a difference that can make over time, and it’s something to think about. This does not mean you should trade quality for quantity. You can have a good standard, yet be financially prudent.
15. Consider Long Term Loans
It is important to note that this is a last-minute approach. It should only be considered if your business is on the brink of collapse.
Do not make the mistake of taking long term loans when your business doesn’t really need one. Long term loans are serious commitments that could come back to bite you if not properly checked.
Discuss with more than one financial accountant on the possibility of getting a long term loan. Also, check if it’s important at the stage your business is.
Are you certain that a long term loan is the only way forward? Then you must negotiate properly at this website e2efinancialsolutions.com . Discuss a good interest rate and payback period.
If you prefer to pay in instalments, you must come to a firm agreement.
16. Get An Education
Most times, nothing else causes financial problems in business except the sheer ignorance on the part of the business owner.
That is why you must take training courses to help you better understand the market, profit margins, separation of capital and other vital skills that are essential to run a business effectively.
You can get this basic training on the internet through online business courses, or business educational sites like business.gov & other websites capable of providing you with the right information to grow and expand your business financially.
Finally…
According to research, about 44% of businesses fail after 4 years due to certain constraints. Financial problems are usually the most common.
Poor capital management, overspending and other related causes are culprits that often lead to financial difficulties.
Has your business hit hard times and struggling to keep things up and running? You need to start making some big changes. It’s also a good idea to reach out personal loan nz to keep your business afloat.
This article has given you many tips on how to overcome financial problems in your business.
I hope you will be able to make better financial decisions for your business and set financial goals. Don’t forget to coordinate your staff towards the actualization of that goal.
I hope this helps you to overcome some financial problems. That particular issue giving you sleepless nights has to stop.
What tip amongst these solutions to financial problems do you think is best for you?
Share with love!
Post author: chibuike nwogbo, leave a reply cancel reply.
Your email address will not be published. Required fields are marked *
Notify me of follow-up comments by email.
Notify me of new posts by email.
Automated page speed optimizations for fast site performance
We're sorry, this computer has been flagged for suspicious activity.
If you are a member, we ask that you confirm your identity by entering in your email.
You will then be sent a link via email to verify your account.
If you are not a member or are having any other problems, please contact customer support.
Thank you for your cooperation
10 Financial Problems in Business Cause and Their Solutions
financialtreat – will explain about the 10 Financial Problems in Business Cause and Their Solutions that you will get in the following article. let’s look at this article carefully!
Micro, Small and Medium Enterprises (MSMEs) is a name for businesses built by individuals, small business entities or households. The lack of news about business management often causes problems, including the case of MSME finances. Even though they are built on a small scale, MSMEs have a big effect on the economy in one country including Indonesia. Well, for that you have to solve financial problems in business.
The more MSMEs that develop in Indonesia, the more job opportunities will be created. This is certainly good considering that the unemployment rate in Indonesia is still quite high. To help MSME fighters to deal with MSME financial problems, the following are some of the financial problems in business that often occur and solutions for handling them:
1. No Budget Planning
The first and frequent financial problem of MSMEs is that entrepreneurs do not make careful budget planning. Please note, even though you are building a business on a small scale, budget planning is still needed.
Some of the points that must be in the budget planning include the business capital owned, operational costs, promotional costs, liability costs and other costs depending on the business model you will live. Not only that, through budget planning you will also know which expenses are mandatory and which expenses you can postpone. Don’t be too excited when starting a business, because a business must actually be done with mature tactics.
2. No Mentor
If you know someone who has successfully built their business, it never hurts to make that person your business mentor. Why are mentors important? Because learning from a mentor who goes directly in an exclusive field by learning through books will bring different results. If you have a mentor directly, you can immediately discuss about your business planning and also what problems you are facing.
So many businesses fail simply because the business owner is reluctant to learn from the mentors. So, if you have the opportunity to learn directly from a mentor, you should not waste the opportunity. This is good for containing MSME financial problems that plague your business.
3. Lack of Discovery
Sure or not, discovery is important for every business. Basically, consumers are always looking for something new from each product. For this reason, product discovery is the most important thing. Not only that, another invention that you have to look at is the discovery of tactics, whether marketing tactics, distribution tactics or other tactics.
Indeed, in doing business you must be observant of the interests and needs of consumers and potential consumers. That way, you can be present to meet the needs of these consumers and potential consumers.
4. No Judgment
The next case of MSME finance occurred due to the absence of a business assessment. Assessment is an activity to find out what are the shortcomings and privileges of the business you are currently in. Through assessment, you can realize which parts should be improved, improved or maintained.
Many times attempts to ignore the existence of judgments on the grounds that there is no time to do so. The assessment does not need to be done every week, because just doing an assessment once a month is good enough.
Not only that, but you can also do market analysis and research on competitors to help your evaluation activities. You can see what the shortcomings of the competitors are then turn them into privileges that your business has. Believe me, assessment activities can prevent you from msME financial cases that often hit.
5. No Financial Statements
Do you know why financial statements are important for a company? Yes, because through financial statements you can see how much capital you have spent, how much profit you get and also other useful news to manage business tactics in the future.
Although financial statements have important benefits, unfortunately there are still many MSMEs that ignore financial statements. Some of them think that just recording expenses and income is enough.
But actually, financial statements contain more info than just money in and money out. If you don’t have the ability to make good financial reports, then there is nothing wrong with hiring professional services. Think of this as a form of investment in your business so that the business avoids MSME financial problems that are likely to be detrimental in the future.
6. Conventional Bookkeeping
In today’s sophisticate times, it is no longer the time to do bookkeeping in a large book that is outlined to form a table. Why?
Because not only does it take a long time, you will also find it difficult to see the records of the long-passed year. Start to create bookkeeping using existing technology such as Microsoft excel.
If you want to be even more sophisticate, you can use the electronic cashier feature from various vendors such as Moka Poin of Sales, one of them. One of the specialties of the electronic cashier feature is that you don’t have to bother compiling your own financial reports, because various reports are already at the electronic cashier. Easy, right?
7. Less Marketing Tactics
One of the simple mistakes that turne out to bring financial cases for MSMEs was the lack of implementing marketing tactics. Please note, marketing tactics play an important role for a business and moreover marketing can be recognize as the spearhead of a business.
No matter how good the quality of the product or service you offer, if you don’t do enough marketing, potential customers will not understand the existence of your business. For this reason, it is very important to compile marketing tactics, especially before the business is done, why?
This is to add an image that understands who your target is going to be and how to sell the product. Make it a habit to make plans before doing marketing, because this will help you to sell products to the right people.
8. Incorrect Management of Stock of Goods
MsME financial cases can also occur if you do not manage the stock of goods properly. If you have been thinking that managing stock of goods does not require a mechanism that understands, then you are wrong.
The worst thing that can happen is that the implications of managing the wrong baran are goods that are damage and cannot be sold. Of course, this will be very detrimental. So you should learn how to manage a good stock of goods to avoid this problem.
Read more financial advisor :
- Let’s Get Acquainted with a Financial Advisor
- Tips for Choosing a Tax Consultant
9. Lack of Capital
The most recent and most frequent case of MSME finance is the lack of business capital. Lack of capital in the middle of the business can have an impact on the absence of budget planning when you want to start an unexpecte business.
One solution to overcome this case of business capital shortage is to take a business loan. It should be understood that taking a business capital loan can be a solution or disaster for business people. Therefore, be sure to take business capital tailore to your needs and ability to pay.
Not only that, take a business capital loan from a party that you can be sure of, for example, those who are license and supervise by the OJK such as Koinworks. Why should it be at Koinworks? Because Koinworks is a formal forum that is already committe to helping the growth of MSMEs in Indonesia through Koinbisnis business capital loan products. Through Koinbisnis, you can get a business capital loan of up to Rp. 2 billion and with a very low interest rate starting from 0.75Prosen only per month.
10. Very Much Debt
The danger of borrowing debt is if you can’t pay off the debt, if the high-interest loan makes your debt bigger day by day. The biggest consequence if you can’t pay off the debt is that the assets you have are sold or confiscate by the bank. Please note that a conducive debt ratio is below 40 Percent and the maximum is 50 Percent, the rest above that is not recommende because it is harmful to your business.
Well, those are some financial problems in business so you must be able to solve financial problems if your business wants to be successful, thank you.
Related posts:
- Explanation of Debt Financing
- How to Write a Financial Advisor Marketing Plan
- Know Much About Federal Income Tax?
- How To Make Money Fast In Texas? Here This Way
Leave a Comment Cancel reply
Save my name, email, and website in this browser for the next time I comment.
425-289-3200
7 Common Small Business Problems and Their Solutions
- Updated November 4, 2021
A small business is a dream for many people, offering independence, autonomy, and creativity. The fact is, some small businesses always thrive, no matter the climate and outlook. The key is setting up systems so your business can be successful, too.
The year 2020 and the following Great Resignation have reinforced a constant in small business life: the need to be nimble and adapt to business conditions in order to succeed. That’s why it’s important as ever to review the most common small business challenges and, most crucially, to strategize methods of overcoming them. An organized and prepared business owner who knows about potential challenges is far more likely to meet them productively than someone who isn’t aware of them.
Here are the common challenges we identified in our 2022 Small Business Trends. This annual survey is spearheaded by Guidant to support small businesses with data trends and insights.
1. Recruitment, Retention of Employees, and Labor Quality
Challenges in labor quality, including employee recruitment and retention were cited by 55% of small business owners, making it the largest challenge. For the first time ever, lack of capital was pushed from its top spot as the number one small business challenge.
When the 2021 Small Business Trends Survey was compiled, the unemployment rate was at the lowest level in a half-century. Strong employment can make it hard to recruit and retain – which explains why the share of small businesspeople citing recruiting and retention as a challenge rose 22% year over year. In 2022, this trend has continued with labor shortages everywhere, from your neighborhood coffee shop to larger factories in cities. The Great Resignation has put an exclamation point on this decade’s employment challenges.
While there may be more people not working and thus in the labor pool, it is still highly important to take the time to recruit effectively and make sure you choose the right person. Remember, your employees highly influence your customer service. Hiring mistakes are costly; turnover costs even for lower-level employees can be roughly $3,500 It is also very important to retain employees once you’ve hired and trained them. Employees leaving can drain your productivity in two ways: you lose their productivity, and your own is sapped by the time needed to recruit a replacement.
Recruitment
If you’re a small business struggling with employment, make a goal for what you want. Take the time to think through what role a new employee should play, and what skills and capabilities they need to bring to the table. Develop a job description that will attract people with those skills and capabilities.
Yes, small businesses often require employees to wear many different hats. But you have to start with a clear vision, or your recruitment efforts may descend into chaos. Hire for the role you most need right now. If the new hire can grow, fine. Concentrate on essential coverage first.
Then, make sure the salary and benefits you offer are competitive within your industry. To attract top people, you need to be competitive. Word of mouth about your salary and benefits can spread within the industry. If your rates are competitive, your recruitment efforts will be enhanced. If they’re not, your recruitment effort may become more difficult and your job openings may sit open.
Competitive salary and benefits are also a key retention strategy . In fact, 63% of small business owners increased compensation in 2022 to combat hiring difficulties. Make yours a good place to work by offering them. The cost of health insurance plans is a big factor for many seeking employment, so make sure your benefits are robust, if possible.
Employees also like to feel valued and appreciated, and if they do they develop the loyalty that drives good retention rates. Institute employee appreciation strategies, such as employee of the month or gift card rewards, if appropriate. Take the time to develop promotional paths for top employees, so they will benefit from company growth.
2. Changing Operations in Response to the Market Conditions
The second most common challenge in 2022 has been supply chain disruption. The National Federation of Independent Businesses now reports that a whopping 40% of businesses have been significantly impacted.
There have also been significant price hikes as a result of increasing inflation. And though the Fed is combating inflation by increasing interest rates, many small business owners find the new interest rates just as grim a reality.
Solution: Diversify and Optimize
Smart business planning is the key to staying afloat during fluctuating market conditions.
Forbes recommends that tackle supply chain issues by increasing your inventory whenever possible, optimizing your supply chain as it is now, and being up front about difficulties with your customers.
Solution: Changing Your Model
You can also change your business model, or how you provide products to customers while maintaining the fundamental customer experience. Restaurants and pet food and toy suppliers, for instance, are succeeding during the pandemic by switching their delivery methods. Rather than customers coming to them, they are delivering to customers.
Moving products and services online is another potentially robust strategy. Businesses from children’s entertainment to yoga studios are finding success with online offerings.
Second, focus on what customers need. Consumers will always continue to purchase what they must have, such as food, medicine, and healthcare needs. Businesses can capitalize on those needs. Some alcohol distilleries, for example, are retooling to make hand sanitizer, and clothing manufacturers are producing medical masks. Allow customer feedback to guide your decisions.
3. Lack of Capital/Cash Flow
The third-biggest challenge faced by small businesses in 2022 Small Business Trends was a lack of capital/cash flow (31%).
Having limited resources as a small business owner is the rule, not the exception. Capital and cash flow are the lifeblood of a business, providing both operating cash and room to expand and innovate. A lack of them poses an immediate threat to the survival of a business.
Solution: Obtaining Funding
Many entrepreneurs think of loans and other funding methods when considering their access to capital and cash flow needs. But loans can be hard to get in every business climate. Loans guaranteed by the Small Business Administration (SBA) can be a bit easier to get, but the percentage of loans approved is still relatively low and is influenced by where you live, the industry you’re looking to enter, and whether you have previous business experience.
Fortunately, there are multiple funding solutions in today’s climate. It’s often possible to access existing resources. Rollovers as Business Startups, or ROBS, for example, allows you to access 401(k) and other retirement funds, which is why it is also known as 401(k) business funding. Home Equity Lines of Credit, or HELOCs, access existing equity in a home.
Solution: Managing Your Capital and Cash Flow
Are business challenges preventing you from meeting your capital and cash flow needs? Here, too, there are multiple solutions. First, remember that it’s always important to assess your own sector and industry. Even in an economic downturn, many sectors thrive. Healthcare, food, and delivery of essential products, for example, will likely be strong. If you’re in these sectors, strategize methods to capture and increase business. If you’re planning a business venture, focus on recession-proof sectors. If your assessment indicates that your business will be negatively affected, however, it’s time to get creative. Can your business be retooled and revamped to meet the challenges of uncertainty with the COVID-19 pandemic?
Finally, manage your cash flow judiciously for business success. This can be a challenge for business owners, but you don’t know what the future business conditions will be so it’s best to have a cushion of cash reserves. Review and revise your product line to concentrate only on what’s most successful. Assess whether you can reduce staff, real estate overhead, and other expenses.
4. Administration
The fourth-largest small business problem (23.25%) is administration work. This includes bookkeeping, payroll, and so forth.
Failing to do these functions adequately can cause problems. Bookkeeping, or keeping track of costs, payments, purchases, and sales, is necessary but time-consuming and potentially complicated. Unfortunately, it’s a crucial function in keeping cash flowing. Without adequate bookkeeping, your business can dry up.
Payroll can be even more complicated. Business owners need to keep abreast of Federal, state, and local taxes to make sure they withhold taxes correctly. They also need to comply with other withholding requirements, such as those for Social Security, Medicare, workers’ compensation, unemployment insurance, and so on.
If a business offers 401(k) payroll deductions, the deductions must be in employee accounts within a specific time period, or the business can be penalized. You can also be the target of Internal Revenue Service (IRS) fines and penalties for failing to pay the right amount of taxes, underpayment, or late payment.
Issues with administrative tasks can also lead to (or stem from) problems in other areas, such as recruitment and time management.
Solution: Outsourcing
Fortunately, solutions are available. The simplest may be to outsource one or both functions, depending on your needs. Hiring personnel to do bookkeeping or payroll is one option.
A less time-consuming and less expensive option is to use widely available solutions. For bookkeeping, many services exist that will scale their services to your needs relatively inexpensively. They provide accounting, expense management, monthly reconciliation, financial statements, and more.
Many payroll services will do the same, providing payroll processing, withholding services, payment methods to employees (such as direct deposit and cutting checks), and more.
Payroll services offer robust packages that can solve other problems for you. Many offer, for example, human resources (HR)-related functions, such as time-keeping assistance, job description templates, and access to online recruiting services. A payroll services provider can offer assistance in corporate compliance as well, such as assistance with employee handbooks and online sexual harassment training.
Check out Guidant’s Small Business Services to learn more.
5. Time Management
Business owners are always pressed for time. It’s the fifth-largest challenge at 21%, and it’s easy to see why.
Running a business demands multiple sets of expertise and activities throughout every area of the business. In a small company, you may be the CEO in the morning, setting the strategy and the long-term course for the ship. In mid-day, you’re a product developer, reviewing sales figures for the most recent product offering. In the afternoon, you’re contacting customers, and later, managing payroll and benefits.
You need to constantly juxtapose long-term goals like realizing your strategy with short-term goals, like meeting payroll. Blend the interruptive nature of business life into that mix – phone calls, e-mails, and conferences, to name just three – and it’s no surprise that time is one of the most important business commodities.
Solution: Active Time Management Solutions
Active time management solutions are important. First, know your primary goals for the business. Your goals should be SMART:
Second, prioritize tasks by linking them to your goals. A to-do list is a useful method of prioritization. Jot down everything you need to do. (It’s very important to have these in written form, by the way. Don’t just keep lists in your head.) Then assign them priority by their importance to company goals and by the time in which you need to do them.
Break long-term goals into specific tasks, and assign them a time frame. If you need to hire a new employee by the beginning of next quarter, for example, the individual steps could be writing a job description, posting the job, reviewing resumes, performing background checks, interviewing several people, and making a choice. Set a realistic time for the completion of each individual task.
Work through your to-do list by priority. Carry over tasks left undone and don’t stress when there are tasks left undone. Uncompleted tasks will exist; it’s part of the nature of business.
Third, after several weeks, analyze your time management, using your to-do lists.
Is there a set of tasks consistently not getting done? If so, consider relevant solutions. You may need to delegate some tasks to existing employees or hire new personnel. You may want to hire contractors in certain areas, such as taxes or creative work like marketing or advertising. If the areas not getting done can be automated, such as payroll or onboarding new employees, consider automating them. This can even help with future business growth, and generate new business ideas and business insights.
Solution: Book Time Just for You
Are the problems stemming from constant interruptions? Make it a practice to book some time clearly just only for you. It could be the first hours in the morning or late at night; whichever works best for your schedule. Enforce the lack of interruptions. Do not answer e-mails or texts. Do not answer the phone. Do not give an impromptu management-employee meeting.
Frankly, if you are consistently not getting to certain tasks, assess whether they are necessary. Have you wanted to check out new office locations or buy new equipment, for example, but never seem to marshal the time needed? Think about undertaking them during slower times of the year.
Finally, assess whether you are performing activities in the most efficient way possible . Online to-do lists, for example, can be revised far more quickly than those made by hand. E-mail blasts to all employees are more productive than individual informational chats. Streamline and systemize your activities whenever possible.
For more guidance on time management, read our Time Management Troubleshooting Guide
6. Marketing and Advertising
For your business to be successful, potential customers need to know about it. This is where marketing and advertising come in as the third most cited (19%) business challenge in 2022 Small Business Trends.
Solutions are abundant in this category. You just have to define what area of marketing and advertising you need to strategize.
Is your issue with how to reach customers, for example? The coronavirus has led to more people being at home and online. If work-from-home folks are your customer base, target them online! From there, you can get even more specific: perhaps your target market really thrives on social media. Maybe they hang out on forums or message boards like Reddit. If that’s the case, developing an online presence and marketing that way will really benefit you. Try direct mail with unique methods for people who might have more time at home – and more time to respond to direct mail. Is your issue keeping sales during periods of belt-tightening for your consumers? Text people with news of promotions and loyalty programs. Campaigns that reward customers can be initiated with minimal cash outlay. If your challenge is developing marketing and advertising, there’s no time like the present to outsource. Creative people work online; recruit independent contractors for strategies and content creation.
7. Managing and Providing Benefits
Benefits are a crucial part of every business. But managing and providing benefits can also be time-consuming and complicated, leading 13% of small business owners to cite it as a leading challenge. This amount has grown significantly year over year. Businesspeople run several risks in not paying enough attention to managing and providing benefits. First, some benefits are required by law , and you can run afoul of the federal government and state mandates if they aren’t managed in accordance with the law. Second, deductibles in small business plans have increased dramatically in recent years. Business owners not paying attention could find themselves in serious trouble.
What benefits are required? Unemployment insurance is Federally required and must go through the states. Disability and workers’ compensation are required by most states. If you have more than 50 employees, the federal government requires that you provide health insurance. If you have more than 20, you must offer health insurance for 18 months after they leave your company through the Consolidated Omni-Budget Reconciliation Act (COBRA). Employers need to be compliant with the Federal Family and Medical Leave Act (FMLA) as well.
Time off to vote, for military service, and to perform jury duty is also required.
Second, benefits are key components in attracting and retaining workers. Your benefits need to be at least competitive within the industry. Common benefits include insurance (health, dental, vision, and life), paid time off (both vacation and holidays), sick leave, and retirement benefits. Benefits often used to attract employees, especially younger ones, include flexible schedules and other options for work-life balance and health-related benefits, such as gym memberships. There’s no quick and easy solution for managing and providing benefits. Small business owners who want to familiarize themselves with the basics of benefits can read here . Frankly, it’s likely best to have at least a bird’s eye view of the benefits environment, to be knowledgeable about requirements and how best to recruit and retain.
That said, you don’t have to be responsible for every benefit function. You can hire a benefits counselor or a lawyer to provide your overview and make sure you are compliant with all government agencies’ laws and regulations. They can also keep you up to date, as requirements change frequently. Staffing consultants can provide competitive industry information on benefits.
Other Small Business Problems
Guess what? Sixteen percent of small business respondents named “Other” as their most significant business challenge! Implicitly, that’s a testimony of how diverse and complex business challenges can be.
The solution, of course, depends on what kind of problem you’re having. But one all-purpose solution that many business owners find helpful is hiring a virtual assistant (VA). VAs are usually contractors. They can do administrative and clerical tasks, such as setting up meetings, creating presentations, and filing.
That said, they aren’t limited to administrative and clerical tasks. Some do bookkeeping; others are whizzes on social media. Many can research, too; if your issues are researching funding methods or potential clients, they can help. They can screen vendors and clients. Finding the time to hire an excellent all-around VA might be just the solution to make your “other” issues recede or vanish entirely. Of course, if you’re the sort of person who wants to fix things yourself, you can always try and polish your own business skills.
Get a Little Extra Help from the Pros
Guidant is dedicated to helping businesses in the startup and early stages. We can advise on funding methods, business structure, and other pressing business issues. We provide mentorship through every stage of your business’s life. Call us today to find out how we can help you at 888.472.4455.
Want to Use ROBS to Start a Business?
Our step-by-step Guide to Rollovers for Business Startups is a complete handbook of everything you need to know about using ROBS to start or buy a small business or franchise.
- November 4, 2021
Debt-free Financing?
If this was useful, you might like:.
Top 10+ Resources and Guide for Getting Started with ROBS
Have you heard of 401(k) business financing — or Rollovers for Business Startups (ROBS)? Here’s everything you need to know about ROBS to get started.
ROBS 401k Business Financing: 10 Types of Eligible Retirement Funds
ROBS 401k business financing has increased in popularity for business owners. Despite having “401k” in the name, you can use most retirement plans for ROBS!
What Retirement Plans Work With ROBS?
Rollovers as Business Startups is a great way to fund your business debt-free. Learn what retirement accounts are eligible, and why.
Using ROBS to Fund Your Small Business While Keeping Your Job
There’s a better way to access your retirement funds to start or buy a business without triggering penalties. There’s even an option to use your current retirement funds as business capital without having to give your two weeks’ notice.
Ready to use your retirement funds to start your business?
No more questions about ROBS? Great! Let’s get the process started today!
Get The eBook
Everything you need to know about rollovers for business start-ups (robs).
This eBooks includes:
The steps to fund your business debt-free in as little as three weeks.
How to structure your corporation according to IRS guidelines.
Tips to control your future and direct your retirement funds.
How to earn a salary, save for retirement and be your own boss.
LEARN TO START DEBT-FREE
By pressing “Download the eBook”, you agree to this websites Privacy Policy, and you consent to receive information from Guidant Financial at the email address or telephone numbers you provided.
Featured In:
Business Planning
Financial forecasting, see how upmetrics works →, strategic planning, entrepreneurs & small business, accelerators & incubators, business consultants & advisors, educators & business schools, students & scholars.
- Sample Plans
Business Plan Course
Strategic canvas templates, e-books, guides & more.
- WHY UPMETRICS?
Customers Success Stories
- 200+ Sample Business Plans
JUMP TO SECTION
Business Problem Statement Explained with Examples
Running a business is an extremely tedious task. Almost always, there’s a problem or two that needs your immediate attention, and addressing these problems head-on to find their solutions is a part of the process. Luckily, there’s a tool that can help you with that: a business problem statement.
You may know how necessary it is to write a business plan for your company. What you may not know of, however, are the tools and techniques that can help you solve your business problems .
A business problem statement can help analyze the problem and come up with new and creative ways to solve it.
Essentially, it enables you to approach the problem in a more systematic, measurable, and objective way.
What is a business problem statement?
How to write a business problem statement, business problem statement framework, business problem statement templates, business problem statement example.
In this article, we will see what is a business problem statement and how you can write one yourself.
What Is a Business Problem Statement?
It defines the problem that a company is facing. Also, it involves an intricate analysis of the problem, details relevant to the situation, and a solution that can solve the problem. This is a simple yet effective way to present a problem and its solution concisely.
In other words, it is a communication tool that helps you visualize and minimize the gap between what’s ideal vs. what’s real. Or to put it in business lingo, the expected performance, and the real performance.
A business problem statement is a compact communication tool that helps you convey what you want to change.
How to Write a Business Problem Statement?
Before writing a business problem statement, it is crucial to conduct a complete analysis of the problem and everything related. You should have the knowledge to describe your problem and also suggest a solution to it.
To make things easy for you, we have explained the four key aspects to help you write your business problem statement. They include:
Define the problem
Defining the problem is the primary aspect of a business problem statement. Summarize your problem in simple and layman terms. It is highly recommended to avoid industrial lingo and buzzwords. Write a 3-5 sentences long summary, avoid writing more than it.
Provide the problem analysis
Adding statistics and results from surveys, industry trends, customer demographics, staffing reports, etc., helps the reader understand the problem distinctly. These references should describe your problem and its effects on various attributes of your business.
Avoid adding too many numbers in your problem statement, and include only the absolute necessary statistics. It’s best to include not more than three significant facts.
Propose a solution
Your business problem statement should conclude with a solution to the problem that was previously described. The solution should describe how the current state can be improved.
Avoid including elaborate actions and steps in a problem statement. These can be further explained when you write a project plan.
Consider the audience
When you start writing your business problem statement, or any formal document, it is important to be aware of the reader. Write your problem statement keeping in mind the reader’s knowledge about the situation, requirements, and expectations.
Although intuitive knowledge does have its place, it is wiser to first consider and mention the facts you have learned based on your research and propose solutions accordingly.
How to Develop a Business Problem Statement
A popular method that is used while writing a problem statement is the 5W2H (What, Why, Where, Who, When, How, How much) method. These are the questions that need to be asked and answered while writing a business problem statement.
Let’s understand them in detail.
- What: What is the problem that needs to be solved? Include the root cause of the problem. Mention other micro problems that are connected with the macro ones.
- Why: Why is it a problem? Describe the reasons why it is a problem. Include supporting facts and statistics to highlight the trouble.
- Where: Where is the problem observed? Mention the location and the specifics of it. Include the products or services in which the problem is seen.
- Who: Who is impacted by this problem? Define and mention the customers, the staff, departments, and businesses affected by the problem.
- When: When was the problem first observed? Talk about the timeline. Explain how the intensity of the problem has changed from the time it was first observed.
- How: How is the problem observed? Mention the indications of the problem. Talk about the observations you made while conducting problem analysis.
- How much: How often is the problem observed? If you have identified a trend during your research, mention it. Comment on the error rate and the frequency and magnitude of the problem.
Business Problem Statement Framework
A problem statement consists of four main components. They are:
- The problem: The problem statement begins with mentioning and explaining the current state.
- Who it affects: Mention the people who are affected by the problem.
- How it impacts: Explain the impacts of the problem.
- The solution: Your problem statement ends with a proposed solution.
Business Problem Statement Templates
Below is a common template used for writing a problem statement. It includes the four key components mentioned in the above framework.
Template 1:
Template 2:.
Business Problem Statement Examples
Here are a few problem statement examples to help you understand how to write your business problem statement:
Example 1: A problem statement by a software company
The problem of a manual auditing process affects the finance department and the staff as the process creates a lot of hassle because of the searching and verifying physical documents.
The impact of this is a lengthy auditing process where many mishaps and misplacements of documents happen. A successful solution would be to create an online database with search filters that would make it easy to find and verify documents.
Example 2: A problem statement by a manufacturing company
The problem of an inefficient manual assembly process affects the productivity of the company, and the workers have to manually install some parts, which consumes more time.
This impacts the production goals and incremental loss for this year. An efficient solution would be to install conveyor belts to optimize the manufacturing process.
Solve Problems Faster with a Business Problem Statement
Writing a problem statement can be tricky. However, building one can help you define the problems to your business partners and find solutions faster.
It helps you present a concise yet informative description of the problem and its potential solutions. Use the above template to create a problem state for your business and eliminate the need to scour through complex documents.
Related Articles
How to Write a Business Plan Complete Guide
4 Proven Techniques For Effective Business Problem Solving
How to Write SMART Goals: Explained with Examples
Reach Your Goals with Accurate Planning
No Risk – Cancel at Any Time – 15 Day Money Back Guarantee
Please fill out the form below and we'll contact you shortly.
We care about your privacy. See our privacy policy
Download Your Template Now
We care about your privacy. See our Privacy Policy
Jump to navigation
- What is a Budget?
- Budgeting Guidelines
- Budget Calculator
- How to Pay Off Debt Faster
- How Much Debt is Too Much?
- Money Makeover
- More Smart Choices
- Smartest Things for Finances
- Why You Should Save Money
- How to Save Money
- Where to Find Money to Save
- How to Save an Emergency Fund
- Ways to Save for a Goal
- Tips to Save Money
- How to Save Money on Your Home Energy Bill
- Saving for Education
- Saving for a Home
- Impulse Spending
- How to Save on Groceries
- Save Money on Clothing
- Alternative Gift Ideas
- 8 Week Christmas Plan
- 4 Week Christmas Plan
- Shopping in the U.S.
- Buying a Time Share
- Traveling on a Small Budget
- Teaching Your Kids About How to Manage Money
- Stretching Your Back to School Budget
- Practical Tips for Post-Secondary Students
- Credit Reporting in Canada
- How Credit Scores are Calculated
- Establishing Credit
- How to Get Your Credit Report & Credit Score
- Maintaining Credit
- How to Get a Super Credit Score
- How to Fix Your Credit
- Protecting Against New Identity Theft
- Joint Debts
- Money Management Basics
- Budgeting Tips
- Expense Tracker
- Income & Expense Tool
- Solving Debt Problems
- Dealing with Creditors
- Webinar Schedule & Details
- Library Workshops
- Employer Resources
- Mortgage Broker Resources
- For Teachers
- Calculators
- Our Services
- Accreditations
You are here
How to overcome 8 sources of financial problems & difficulties.
Financial problems and challenges happen to everyone at some point, and the stress and worry can get to you. However, realizing that there is almost always a way out can help you not feel so depressed. You may be able to find the way out yourself, or you may need someone else's perspective to help you find a solution. Below we’ll show you how to overcome financial problems and difficulties and ease your stress. But, one size does not fit all. If your situation is beyond the general help provided here, we’ll also let you know who you can go to for more in-depth help.
1. Identify the Underlying Problem That's Causing the Difficulties
The first step to overcoming financial problems is to identify the underlying issue that’s causing the financial difficulties. Financial problems are usually a symptom of a bigger issue. To come up with solutions that work in the long run, take the time to identify the real source of your financial troubles. Here are some common things to think about:
Your problem may not be listed above or it may be more complex. However, the concept of identifying a specific problem is important because it is more likely to result in a lasting solution. Just like with a leaky faucet; placing a bucket below is temporary. Fix the tap and the leak will stop. Focus on solving the problem that’s causing your money troubles, rather than dwelling on your stress.
2. Create a Budget - Spend Money in a Way That Helps Solve the Problem
One of the best weapons for combating financial problems is a budget. A budget is a monthly spending plan for your money. Creating a budget is like turning the lights on to find your way around a dark room. You no longer need to wander in the dark; banging your shins, tripping over the furniture, and stepping on the dog. Instead, with the lights on, you can see what’s going on and prevent problems before they happen. A budget works much the same way; it guides your spending decisions so that you're spending money on what's really important to you. In this case, you'll spend your money in a way that helps solve your financial problem .
Click here to learn more about creating a budget , or try out our budget calculator that guides you through the budgeting process , points out common problems, and offers suggestions to improve your budget.
Track Your Expenses to Build a Budget That Works
As you create your budget, it’s important that your expenses aren’t just guesses – they need to reflect reality. You may want to track your expenses for at least a couple of weeks (a month is best) to objectively see where you are spending your money and how much you’re spending. Although you may think you know where your money is going, when most people tally up all their purchases for a month, they are usually quite surprised to notice that their spending doesn’t always match up with what they thought their priorities were.
3. Determine Financial Priorities to Guide Your Spending Choices
4. Identify Small Steps You Can Take to Address the Problem & Achieve Your Goals
Look here to get ideas of where find some extra money each month , get the card paid off, and then permanently have $50 extra to use in your budget every month. However, if by the time you reach this goal you’ve learned to get by without this $50, then use it to accelerate the payment of another debt each month, and get all of your debts paid off more quickly.
Look for Things You Can Do, Even Temporarily, to Improve Your Situation
Here are more ideas or steps you can consider taking to improve your financial situation and alleviate difficulties:
- As you look through your budget, ask yourself: Do I want this or do I need it? Will spending this money get me closer to my financial goals or further away? Can I live without it? Learn more about separating needs from wants .
- Do you use credit cards for impulse purchases? This can contribute to a cycle of ongoing financial difficulty and add as much as 50% to everything you purchase . Learn how to reduce or change impulsive spending habits .
- Ask yourself if you can downsize anything in your budget or switch to a less expensive option. If vehicle costs are straining your budget, can you downsize your vehicle, get rid of one vehicle (the average person spends over $9,000 per year to own and operate a vehicle), take transit (80% cheaper than owning a vehicle), or car pool? If your rent, mortgage, or home upkeep is bleeding you dry, can you downsize to something more affordable, rent out your basement, rent a room in your house, rent out the storage space in your garage, or can you take in a student for some extra income?
- If debt is causing you financial problems, here are a lot of ways to reduce your debt or here are a dozen of the most effective ways to get out of debt .
- Can you take on a side job or create another source of income with something you know how to do well?
- Look outside the box, ask yourself tough questions, invite a trusted friend to have a look at your budget and make suggestions, or sit down with a Credit Counsellor and get their suggestions .
- Research viable options that will move you towards your goals. A consolidation loan , speaking with a Credit Counsellor , a Debt Management Program , or some other option may be a possibility.
While doing any of these can be an unappealing thought, don’t just dismiss them because they’ll move you out of your comfort zone. Keep thinking about them and give them some consideration. Come back to these ideas from time to time to see if you can come up with a new angle on decreasing your expenses or increasing your income that might just work for you. Remember, you’re trying to get through a tough a time; you don’t need to do this forever, just to get back on track. If you’re really struggling, an experienced Credit Counsellor can be a great, free source of suggestions .
5. Develop Your Plan to Overcome Financial Problems for Good
Once you’ve come up with some ideas for how to begin tackling your financial problems and difficulties, you can put together a realistic plan to accomplish your goals . Some goals will have a timeline of a few months; others will need a longer timeline, like 24 - 36 months. Write your goals down, but also write down where you’re at now in relation to each goal. For example, if one of your goals is to pay off a $4,000 debt, make sure to write down the current debt balance and your future goal of paying this down to $0. You’ll want to include in your plan the amount of money you’re going to pay on this debt every month so that you can pay it off within your desired time frame. For more help on setting goals, have a look at this . Here are also some tips on setting financial goals with your spouse .
If you’re really feeling overwhelmed and stressed by your situation, you can also reach out to a non-profit credit counselling agency for help . They have professionally trained Credit & Debt Counsellors who can review your situation with you, help you put together a realistic budget, and help you come up with a plan to solve your current challenges and get your finances back on track. Their help is usually free and is always confidential.
6. Review How Things are Going
The last step takes place once you are a few months into working on your plan. Every once-in-a-while, take a few minutes to review how things are going. Is your plan working? Are you making progress toward your goals? If not, you’ll need to take a closer look to figure out why not and adjust your plan. Your plan needs to be realistic, or it’s not going to work. It should also contain some things you weren’t doing before you put the plan in place.
If you keep doing what you were doing before, then you’ll continue to get the same result as before – problems. You’ve got to do something different to get a different outcome.
As you follow your plan and see improvements in your situation, be open to the possibility of fine-tuning the plan. Once you start making some progress, you may find you’re doing better than you thought, or you may come up with some new insights. Improving your plan so that you accomplish your goals more quickly is good as long as your budget can afford the changes and everyone who relies on your budget is okay with the more aggressive approach.
Preventing Future Financial Challenges
Unexpected financial challenges are bound to arise in the future - in fact, research shows that 6 in 10 Canadians will experience major life events that will challenge their prior financial plans . The key to tackling these challenges is to be flexible. Review your budget occasionally and make necessary changes. Build up savings so that you can handle unanticipated expenses without going into debt and putting yourself in a difficult situation.
Overcoming financial problems and difficulties isn’t easy, but by setting some clear priorities for yourself, identifying ways to achieve these goals, and persevering with your plan, you can overcome the challenges and at the same time, put an end to the financial stress.
- Online Workshop: How to Resolve Relationship & Marriage Money Problems & Issues
- How to Protect Yourself from a Financial Emergency
- Does Being Organized with Your Money Really Matter?
<< Back to the main Blog page
- Add new comment
vivienne replied on Mon, 12/10/2018 - 4:59pm Permalink
how to overcome 8 types of financial problems
sagar pal replied on Tue, 05/28/2019 - 11:43pm Permalink
MyMoneyCoach Team replied on Wed, 05/29/2019 - 8:51am Permalink
Where to get help
Bandela Pratap replied on Thu, 03/05/2020 - 7:10am Permalink
Financial problems
MyMoneyCoach Team replied on Thu, 03/05/2020 - 8:40am Permalink
Finding help
Pushkaraj Sawant replied on Fri, 09/04/2020 - 7:21am Permalink
More More Money Problem
MyMoneyCoach Team replied on Fri, 09/25/2020 - 9:40am Permalink
You should speak with a credit counsellor
Diganta Gohain replied on Sat, 09/05/2020 - 8:43am Permalink
Drastic financial problems
MyMoneyCoach Team replied on Fri, 09/25/2020 - 9:43am Permalink
Two places to look for help
Lanie Won replied on Wed, 05/04/2022 - 7:35am Permalink
More From Forbes
How to solve business cash flow problems.
- Share to Facebook
- Share to Twitter
- Share to Linkedin
A fluctuation in revenue is normal for businesses of all sizes, but if leaders are consistently having trouble meeting the requirements of accounts payable, then the business could be experiencing issues that are disrupting the cash flow. If these issues are not detected and managed early on, the business could be at risk of failure.
Handling cash flow problems requires short- and long-term financial adjustments (or a mix of both). Here, 11 members from Forbes Business Council provide methods for solving cash flow issues. From adjusting the pricing model to cutting expenses, their cash flow insight follows.
Members of Forbes Business Council offer tips for solving business cash flow problems.
1. Understand Growth Levers
During cash crunches, it's easy to simply cut costs, but you could starve your business of the fuel it needs to keep growing. The first step is to understand your growth levers in detail. For example, dissect your marketing spend and understand the ROI of each lever to ensure you're investing in profitable streams and conserving cash where it's not converting. - Missy Narula , Exhale Parent
2. Analyze P&L And Cash Flow Statements
Optimizing the prices you set and negotiate by properly analyzing the P&L statements and cash flow, including on- and off-invoice discounts and costs to serve at a customer level. This ensures you are being fairly compensated for the value you create. It also exposes the hidden costs, like payment terms and rebates, which are often not understood at a granular level and can cause real cash flow and profitability issues. - Gabriel Smith , Pricefx
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
The Inside Story Of Papa John's Toxic Culture
Aew dynamite results: winners and grades as powerhouse hobbs wins tnt title, ‘front mission 2: remake’ is coming to switch this june.
3. Examine Your Pricing Model
First, look at ways to accelerate receivables. Bill upfront or bill half upfront. Next, examine your pricing model. Determine which products or services you provide that no one else can, then double the price on those. Sure, you'll lose customers but not all of them. Lastly, jettison unprofitable (or minimally profitable) products or services and go all-in on those that generate the most cash. - Kim Troy , Civilis Consulting
4. Reduce Expenses
Depending on the business and situation, a few cutbacks can be the solution to returning to a positive cash flow. Non-essential expenses, such as premium services, marketing and advertising, business meals and unnecessary office supplies, can all go. Business owners can reach out to vendors to see if they are willing to negotiate extended payment dates. - Don Daszkowski , International Franchise Professionals Group - IFPG
5. Prioritize Sales Activities
I've always lived by the motto that "sales solves all problems." Smaller companies often have a cyclical sales cycle of sell then execute. Refocusing on sales activities, and more importantly on profitable sales, can help solve many cash flow issues. During the sales cycle, nearer-term actions like pushing out payables, collecting on accounts receivable, bank financing and cost-cutting will buy time. - Victoria Lakers , The Lancer Group
6. Solicit Feedback From Unhappy Customers
Cash flow problems are usually the result of visitor flow problems. If your sales are slow and you have plenty of visitors, whether they are in-person or digital, you might have a design problem or a product problem. This is less common but if this is the case, you should solicit feedback from your unhappy customers who canceled with you. They usually have the most constructive feedback. - James Parsons , Content Powered
7. View Your Cash Flow From Different Angles
Cash flow is the one thing businesses must manage. Understand your cash flow from different angles. Examine its past, present and future, and look at the future from different angles. Do not be naive and think it is best to be positive and hope for the best. Learn from your finances and cash flow and understand this is your business's lifeblood. We must manage and learn from our cash flow. - Debra Ruh , Ruh Global IMPACT
8. Analyze Where Every Penny Ends Up
First, shore up your accounting processes and make sure you're getting the money you're owed. Then, assess the pennies. Small changes may seem like just that but by identifying all those small expenses that may be unnecessary, you may be able to find quick, large-scale cost savings that don't affect operations. Finally, address your pricing and overhead, but make sure to think long term. - Clark Waterfall , BSG - Boston Search Group
9. Evaluate Your Business Model And Sales Cycle
First, look at your business model, then your sales cycle and cash conversion and then your expenses. Every business is different. Maybe the business model isn't workable. Maybe your B2B sales cycles stretch out. Maybe customers aren't paying fast enough or it's taking too long to turn inventory into cash. Unless you know you're overspending, it's probably not expenses, though that can be a stopgap. - Tam Thao Pham , DryShield
10. Investigate Customer Churn and Product Portfolio
A short-term solution is to revisit accounts payable and reduce overhead costs. A longer-term solution requires an investigation of customer churn and product portfolio. Reduced sales are typically the main culprit for cash flow issues, and evaluating the fit between product portfolio and customer needs is an effective way to understand the causal relationships. - Pankaj Srivastava , Practicalspeak
11. Turn To Your Investors
I think the first place to go is to your original investor. Hopefully, you’ve been honest and upfront about issues the business is facing. I’d allow the investor to double down and inject some cash into the business to protect their investment. If that doesn’t fare well, then I’d explore a strategic lender that can bridge the cash flow gap. Shockingly, there are still a ton of lenders out there. - Hoda Mahmoodzadegan , Molly’s Milk Truck
- Editorial Standards
- Reprints & Permissions
- How We're Different
- The Growth Planning Process
See It In Action
- How It Works
- Interactive Product Tour
- One-Page Plan
- Step-by-Step Guidance
- 500+ Sample Plans
- Automatic Financials
- Lender-Ready Themes
- Financial Performance Tracking
- See All Features
For Small Businesses
- Create a Plan for Funding
- Create a Plan for Strategy
- Test a Business Idea
- Build & Present Financials
- Budgeting & Performance Management
- Get Professional Plan Writing Help
Solutions for
- Consultants and Coaches
- SBA Partners
- Incubators & Accelerators
- Public Accountants
- Education Hub
- LivePlan Blog
- Customer Success Stories
- Ebooks & Templates
- Webinars & Events
- Help Center
0 results have been found for “”
Return to blog home
10 Step Process for Effective Business Problem Solving
Posted august 3, 2021 by harriet genever.
When you start a small business or launch a startup, the one thing you can count on is the unexpected. No matter how thoroughly you plan, forecast , and test, problems are bound to arise. This is why as an entrepreneur, you need to know how to solve business problems effectively.
What is problem solving in business?
Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals . These are typically complex issues that create a gap between actual results and your desired outcome. They may be present in a single team, operational process, or throughout your entire organization, typically without an immediate or obvious solution.
To approach problem solving successfully, you need to establish consistent processes that help you evaluate, explore solutions, prioritize execution, and measure success. In many ways, it should be similar to how you review business performance through a monthly plan review . You work through the same documentation, look for gaps, dig deeper to identify the root cause, and hash out options. Without this process, you simply cannot expect to solve problems efficiently or effectively.
Why problem solving is important for your business
While some would say problem-solving comes naturally, it’s actually a skill you can grow and refine over time. Problem solving skills will help you and your team tackle critical issues and conflicts as they arise. It starts from the top. You as the business owner or CEO needing to display the type of level-headed problem solving that you expect to see from your employees.
Doing so will help you and your staff quickly deal with issues, establish and refine a problem solving process, turn challenges into opportunities, and generally keep a level head. Now, the best business leaders didn’t just find a magic solution to solve their problems, they built processes and leveraged tools to find success. And you can do the same.
By following this 10-step process, you can develop your problem-solving skills and approach any issue that arises with confidence.
1. Define the problem
When a problem arises, it can be very easy to jump right into creating a solution. However, if you don’t thoroughly examine what led to the problem in the first place, you may create a strategy that doesn’t actually solve it. You may just be treating the symptoms.
For instance, if you realize that your sales from new customers are dropping, your first inclination might be to rush into putting together a marketing plan to increase exposure. But what if decreasing sales are just a symptom of the real problem?
When you define the problem, you want to be sure you’re not missing the forest for the trees. If you have a large issue on your hands, you’ll want to look at it from several different angles:
Competition
Is a competitor’s promotion or pricing affecting your sales? Are there new entrants in your market? How are they marketing their product or business?
Business model
Is your business model sustainable? Is it realistic for how fast you want to grow? Should you explore different pricing or cost strategies?
Market factors
How are world events and the nation’s economy affecting your customers and your sales?
Are there any issues affecting your team? Do they have the tools and resources they need to succeed?
Goal alignment
Is everyone on your team working toward the same goal ? Have you communicated your short-term and long-term business goals clearly and often?
There are a lot of ways to approach the issue when you’re facing a serious business problem. The key is to make sure you’re getting a full snapshot of what’s going on so you don’t waste money and resources on band-aid solutions.
Going back to our example, by looking at every facet of your business, you may discover that you’re spending more on advertising than your competitors already. And instead, there’s a communication gap within your team that’s leading to the mishandling of new customers and therefore lost sales.
If you jumped into fixing the exposure of your brand, you would have been dumping more money into an area you’re already winning. Potentially leading to greater losses as more and more new customers are dropped due to poor internal communication.
This is why it’s so vital that you explore your blind spots and track the problem to its source.
2. Conduct a SWOT analysis
All good businesses solve some sort of problem for customers. What if your particular business problem is actually an opportunity, or even a strength if considered from a different angle? This is when you’d want to conduct a SWOT analysis to determine if that is in fact the case.
SWOT is a great tool for strategic planning and bringing multiple viewpoints to the table when you’re looking at investing resources to solve a problem. This may even be incorporated in your attempts to identify the source of your problem, as it can quickly outline specific strengths and weaknesses of your business. And then by identifying any potential opportunities or threats, you can utilize your findings to kickstart a solution.
3. Identify multiple solutions with design thinking
As you approach solving your problem, you may want to consider using the design thinking approach . It’s often used by organizations looking to solve big, community-based problems. One of its strengths is that it requires involving a wide range of people in the problem-solving process. Which leads to multiple perspectives and solutions arising.
This approach—applying your company’s skills and expertise to a problem in the market—is the basis for design thinking.
It’s not about finding the most complex problems to solve, but about finding common needs within the organization and in the real world and coming up with solutions that fit those needs. When you’re solving business problems, this applies in the sense that you’re looking for solutions that address underlying issues—you’re looking at the big picture.
4. Conduct market research and customer outreach
Market research and customer outreach aren’t the sorts of things small business owners and startups can do once and then cross off the list. When you’re facing a roadblock, think back to the last time you did some solid market research or took a deep dive into understanding the competitive landscape .
Market research and the insights you get from customer outreach aren’t a silver bullet. Many companies struggle with what they should do with conflicting data points. But it’s worth struggling through and gathering information that can help you better understand your target market . Plus, your customers can be one of the best sources of criticism. It’s actually a gift if you can avoid taking the negatives personally .
The worst thing you can do when you’re facing challenges is isolating yourself from your customers and ignore your competition. So survey your customers. Put together a competitive matrix .
5. Seek input from your team and your mentors
Don’t do your SWOT analysis or design thinking work by yourself. The freedom to express concerns, opinions, and ideas will allow people in an organization to speak up. Their feedback is going to help you move faster and more efficiently. If you have a team in place, bring them into the discussion. You hired them to be experts in their area; use their expertise to navigate and dig deeper into underlying causes of problems and potential solutions.
If you’re running your business solo, at least bring in a trusted mentor. SCORE offers a free business mentorship program if you don’t already have one. It can also be helpful to connect with a strategic business advisor , especially if business financials aren’t your strongest suit.
Quoting Stephen Covey, who said that “strength lies in differences, not in similarities,” speaking to the importance of diversity when it comes to problem-solving in business. The more diverse a team is , the more often innovative solutions to the problems faced by the organization appear.
In fact, it has been found that groups that show greater diversity were better at solving problems than groups made up specifically of highly skilled problem solvers. So whoever you bring in to help you problem-solve, resist the urge to surround yourself with people who already agree with you about everything.
6. Apply lean planning for nimble execution
So you do your SWOT analysis and your design thinking exercise. You come up with a set of strong, data-driven ideas. But implementing them requires you to adjust your budget, or your strategic plan, or even your understanding of your target market.
Are you willing to change course? Can you quickly make adjustments? Well in order to grow, you can’t be afraid to be nimble .
By adopting the lean business planning method —the process of revising your business strategy regularly—you’ll be able to shift your strategies more fluidly. You don’t want to change course every week, and you don’t want to fall victim to shiny object thinking. But you can strike a balance that allows you to reduce your business’s risk while keeping your team heading in the right direction.
Along the way, you’ll make strategic decisions that don’t pan out the way you hoped. The best thing you can do is test your ideas and iterate often so you’re not wasting money and resources on things that don’t work. That’s Lean Planning .
7. Model different financial scenarios
When you’re trying to solve a serious business problem, one of the best things you can do is build a few different financial forecasts so you can model different scenarios. You might find that the idea that seemed the strongest will take longer than you thought to reverse a negative financial trend. At the very least you’ll have better insight into the financial impact of moving in a different direction.
The real benefit here is looking at different tactical approaches to the same problem. Maybe instead of increasing sales right now, you’re better off in the long run if you adopt a strategy to reduce churn and retain your best customers. You won’t know unless you model a few different scenarios. You can do this by using spreadsheets, and a tool like LivePlan can make it easier and quicker.
8. Watch your cash flow
While you’re working to solve a challenging business problem, pay particular attention to your cash flow and your cash flow forecast . Understanding when your company is at risk of running out of cash in the bank can help you be proactive. It’s a lot easier to get a line of credit while your financials still look good and healthy, than when you’re one pay period away from ruin.
If you’re dealing with a serious issue, it’s easy to start to get tunnel vision. You’ll benefit from maintaining a little breathing room for your business as you figure out what to do next.
9. Use a decision-making framework
Once you’ve gathered all the information you need, generated a number of ideas, and done some financial modeling, you might still feel uncertain. It’s natural—you’re not a fortune-teller. You’re trying to make the best decision you can with the information you have.
This article offers a really useful approach to making decisions. It starts with putting your options into a matrix like this one:
Use this sort of framework to put everything you’ve learned out on the table. If you’re working with a bigger team, this sort of exercise can also bring the rest of your team to the table so they feel some ownership over the outcome.
10. Identify key metrics to track
How will you know your problem is solved? And not just the symptom—how will you know when you’ve addressed the underlying issues? Before you dive into enacting the solution, make sure you know what success looks like.
Decide on a few key performance indicators . Take a baseline measurement, and set a goal and a timeframe. You’re essentially translating your solution into a plan, complete with milestones and goals. Without these, you’ve simply made a blind decision with no way to track success. You need those goals and milestones to make your plan real .
Problem solving skills to improve
As you and your team work through this process, it’s worth keeping in mind specific problem solving skills you should continue to develop. Bolstering your ability, as well as your team, to solve problems effectively will only make this process more useful and efficient. Here are a few key skills to work on.
Emotional intelligence
It can be very easy to make quick, emotional responses in a time of crisis or when discussing something you’re passionate about. To avoid making assumptions and letting your emotions get the best of you, you need to focus on empathizing with others. This involves understanding your own emotional state, reactions and listening carefully to the responses of your team. The more you’re able to listen carefully, the better you’ll be at asking for and taking advice that actually leads to effective problem solving.
Jumping right into a solution can immediately kill the possibility of solving your problem. Just like when you start a business , you need to do the research into what the problem you’re solving actually is. Luckily, you can embed research into your problem solving by holding active reviews of financial performance and team processes. Simply asking “What? Where? When? How?” can lead to more in-depth explorations of potential issues.
The best thing you can do to grow your research abilities is to encourage and practice curiosity. Look at every problem as an opportunity. Something that may be trouble now, but is worth exploring and finding the right solution. You’ll pick up best practices, useful tools and fine-tune your own research process the more you’re willing to explore.
Brainstorming
Creatively brainstorming with your team is somewhat of an art form. There needs to be a willingness to throw everything at the wall and act as if nothing is a bad idea at the start. This style of collaboration encourages participation without fear of rejection. It also helps outline potential solutions outside of your current scope, that you can refine and turn into realistic action.
Work on breaking down problems and try to give everyone in the room a voice. The more input you allow, the greater potential you have for finding the best solution.
Decisiveness
One thing that can drag out acting upon a potential solution, is being indecisive. If you aren’t willing to state when the final cutoff for deliberation is, you simply won’t take steps quickly enough. This is when having a process for problem solving comes in handy, as it purposefully outlines when you should start taking action.
Work on choosing decision-makers, identify necessary results and be prepared to analyze and adjust if necessary. You don’t have to get it right every time, but taking action at the right time, even if it fails, is almost more vital than never taking a step.
Stemming off failure, you need to learn to be resilient. Again, no one gets it perfect every single time. There are so many factors in play to consider and sometimes even the most well-thought-out solution doesn’t stick. Instead of being down on yourself or your team, look to separate yourself from the problem and continue to think of it as a puzzle worth solving. Every failure is a learning opportunity and it only helps you further refine and eliminate issues in your strategy.
Problem solving is a process
The key to effective problem-solving in business is the ability to adapt. You can waste a lot of resources on staying the wrong course for too long. So make a plan to reduce your risk now. Think about what you’d do if you were faced with a problem large enough to sink your business. Be as proactive as you can.
Editor’s note: This article was originally published in 2016. It was updated in 2021.
Harriet Genever
Posted in management.
- SUGGESTED TOPICS
- The Magazine
- Most Popular
- Newsletters
- Managing Yourself
- Managing Teams
- Work-life Balance
- The Big Idea
- Data & Visuals
- Reading Lists
- Case Selections
- HBR Learning
- Topic Feeds
- Account Settings
- Email Preferences
Managing the Liquidity Crisis
- Mike Harmon
- Victoria Ivashina
Companies are scrambling for cash in the face of the pandemic.
Companies are scrambling for cash in the wake of the pandemic. Unfortunately, for structural reasons they are unlikely to get the cash they need from their traditional lenders, even though the financial system is in relatively good shape and there are reserves of cash that could potentially be tapped. Government intervention will be required to help release the private capital available, but what is on the table with the CARES Act needs some amendments if the government is to get the cash where it’s needed.
In these difficult times, we’ve made a number of our coronavirus articles free for all readers. To get all of HBR’s content delivered to your inbox, sign up for the Daily Alert newsletter.
The coronavirus pandemic has left the corporate sector scrambling for cash. So far, a relatively robust financial system has been able to provide short-term funding, primarily through the revolving lines of bank credit available to most firms. According to JPMorgan, as of the end of March, nearly $208 billion ( 77% of the funds available in the facilities) had been borrowed by large companies through revolver drawdowns, of which borrowings by below investment grade firms accounted for about half.
But will revolving lines be enough to bridge companies through the crisis? Revolvers are used to bridge temporary cash shortfalls — and once the limit of the line is reached, no more cash is available, unless the lenders agree. If you can’t fund ongoing obligations out of the money you have coming in, you are going to have to get another form of financing or file for bankruptcy. So how are borrowers positioned right now?
Corporate Balance Sheets Are Already Highly Leveraged
With the economic impact of the pandemic likely to last into the fourth quarter of this year, it is very likely that companies will have to look beyond their bank credit lines for additional liquidity. Unfortunately, the global corporate sector went into the pandemic with unprecedented levels of financial leverage, largely because the low-interest environment following the 2008 financial crisis made it easy for companies to borrow. Global debt on non-financial corporations stood at $71 trillion by the end of 2018, according to S&P , a rating agency. This is up 15% from 2008 and represents 93% of global GDP. Of this, we estimate that almost $6 trillion sits on the balance sheets of companies that are highly leveraged.
Further Reading
Coronavirus: Leadership and Recovery
The riskiness of this $6 trillion in debt has increased since the last downturn. A decade of robust debt markets came hand-in-hand with looser creditor governance terms and weaker covenants. Borrowers have been able to artificially inflate their earnings for loan tests using liberal “ EBITDA addbacks .” As a result, many weaker highly leveraged firms have been able borrow more without restructuring their balance sheets than they would otherwise have been able to. For the past several years, these factors have raised red flags for economists, global leaders and regulatory bodies. In December, before the virus emerged as a serious economic threat, the Financial Stability Board (FSB) issued a warning regarding the vulnerability of the leveraged loan markets to sudden economic shocks.
Typically, when companies are running out of cash and need a loan, they turn first to their current lenders, who with their privileged access to company-specific information, are best placed to make a decision quickly. In the current environment, however, leveraged firms will struggle to obtain financing from their existing loan creditors, for a variety of reasons.
Structural Limits on Lenders
Let’s start with the financing challenges facing larger companies. Leveraged loans to these companies are funded primarily by non-bank institutional investors, with the majority of cash raised by the issuers of collateralized loan obligations (CLOs). Like the CMOs that were such a feature of the financial crisis of 2008, they are structured credit vehicles that raise debt finance to invest in a specific class of assets, which serve as collateral for the debt issued.
As their name suggests, CLOs use the funds received from the issuance of multiple tranches of debt and equity to acquire a diversified portfolio of “leveraged” loans (loans to companies that are relatively highly leveraged and consequently offer higher interest rates to reflect the added risk). According to S&P (S&P Global Market Intelligence, LCD’s Quarterly Leveraged Lending Review: 4Q 2019) between 2015 and 2019, 58.4% of the primary leveraged loan origination in the U.S. was funded by CLOs (and 18.7 % by mutual funds specializing in investing in high-yield loans).
Although CLO structures have evolved over the years, at their core, they are all designed to protect investors at the senior end of their capital hierarchy: the global pension funds and insurance companies that tend to buy the AAA-rated collateralized notes issues by the CLOs. All CLO agreements contain a series of protective covenants that place guardrails on the loans to companies made by the CLO portfolio manager. The net effect of these provisions is to establish strong disincentives for CLO managers to hold or invest in assets that are more likely to default — as indicated by ratings of CCC+ or less.
Typically, a CLO is limited to investing only 7.5% of the whole portfolio in CCC loans. If existing holdings are downgraded, placing them in the CCC category, then the CLO manager is essentially obliged to direct future lending towards higher-grade borrowers. What’s more, excess holdings of CCC are marked to market to test that the value of the CLO collateral (the loans extended) exceeds the value of the debt the CLO has issued by a certain margin. Thus, drops in the prices of lower-grade loans, which are inevitable in the current crisis, will further require CLOs to skew future lending towards safer borrowers, in order to maintain the collateral levels mandated in the debt issued by the CLO.
CLO managers have entered the pandemic crisis with portfolios over-weighted with loans that are most likely to be downgraded to the undesired CCC category. Although single-B rated loans comprise 56% of the U.S. leveraged loan market, they comprise 70% of syndicated CLO portfolios. Single-B minus loans comprise approximately 29% of these loans (S&P Global Market Intelligence, LCD’s Quarterly Leveraged Lending Review: 4Q 2019). Already to date, as a result of downgrades, CCC assets have increased to 9% across CLO deals on average, putting many CLOs in violation of the 7.5% threshold (Creditflux, 04/06/2020, “S&P puts 48 triple C-heavy CLOs on negative watch”). Moreover, as of March 31, the average bid for U.S. leveraged loans was 83 cents on the dollar and 63% of the market was bid below 90 cents (S&P Global Market Intelligence, SP-LSTA LLI Liquid Composites).
This is a crisis hiding around the corner. Given the covenant constraints and current market conditions, it is pretty clear that CLOs will be unable or at least unwilling to extend any additional capital to the most leveraged borrowers. It is worth noting that in two recent debt restructurings — Deluxe Entertainment and Acosta — CLOs declined to participate proportionately.
Small and mid-cap enterprises (SMEs) are not immune to the leverage problem, but they are less visible due to the private nature of the bulk of this market. CLOs are not a major player in this segment, but over the past decade, a desire to reach for yield has attracted other providers of risky debt capital to the balance sheet of SMEs. By the end of 2019, business development companies (BDCs) — publicly quoted investment funds specializing in loans to SMEs — were holding about $110 billion in SME debt (S&P Global Market Intelligence, U.S. Middle Market Research). An even larger amount – $600 billion by some informal estimates — is held by a wide variety of private investment funds.
Although it is difficult to obtain data on SME balance sheets, we would expect a proportion of these companies to be reasonably highly leveraged, given the environment and the availability of credit. It is also unclear whether existing creditors have the funds and flexibility to inject additional capital. Given the inevitable downturn in the value of their existing loans to SMEs following the pandemic at least some of these investment funds will be facing some pressure. In any event, many SMEs will have little available collateral to offer lenders and face more uncertain commercial futures than their larger competitors, who benefit from relatively large and stable market shares and can access more efficient capital markets.
Where Does This Leave Us?
Given that their bank credit lines are already full, the effective closure of the main sources of liquidity for lower-rated companies leaves only one plausible private-sector source for these companies: private capital investors, specifically distressed debt funds, private equity, private debt funds, and hedge funds. These investors have plenty of money available — about $1 trillion in cash waiting to be invested. But in the current circumstances, with the debt of many highly leveraged companies trading well below par, investment by these players will likely entail some form of capital restructuring. This can be a complex process, requiring extensive due diligence and involving negotiation among many parties. As a result, investors may not be able to provide liquidity quickly enough to meet the timing of many borrowers’ needs.
The bottom line is that without a meaningful government intervention, a very large number of highly leveraged companies will almost certainly be forced into free-fall bankruptcy as a direct result of the pandemic, even though there is plenty of cash in the financial system that could tide them over. But clearly any such interventions should be structured so as to channel that $1 trillion to where it is needed rather than simply substitute for it. Let’s look at what the government is putting on the table.
On March 27, President Trump signed the CARES Act, a bill which includes, among other measures, up to $849 billion to back loans and assistance to small and large businesses. This seed capital from the Treasury will be further increased by contributions from the Federal Reserve. Although several details of the program have yet to be specified, we are concerned that their benefits for leveraged companies may fall short on several fronts.
To begin with, the Federal Reserve has yet to define the collateral requirements for loans to large and medium-sized businesses. If it requires — as it generally has done in the past — that these loans be fully secured by collateral, the act will not help those highly leveraged companies that do not have unpledged collateral, with very few exceptions.
Moreover, the CARES Act also excludes from the small-business portion of the package the small companies that are backed by private equity firms. As a result, the act does little to protect many of the companies and jobs that are arguably most at risk from the economic shock delivered by the coronavirus pandemic and penalizes perfectly good small companies that happen to be owned by private equity investors.
What should the government do to fix or clarify the program? These three amendments should be urgently considered:
- Remove the affiliate exclusion of small companies backed by private equity from the small business assistance provisions of the act . These companies are as much part of the fabric of the U.S. economy, employing people and generating economic growth, as any other small companies. To ensure that this assistance does not amount to a bailout of the private equity firms that back them, and which elected to leverage the companies in the first place, the exemption could require that loans extended under the program be matched with an equal amount of fresh equity capital provided by the owners. To further limit abuse of the assistance, repayment of the loans could be required, rather than forgiven as with other SBA-provisioned loans. Defaults on payment could result in a forced conversion into a majority of the equity of the company.
- Relax the Fed’s collateralization requirements. For large and mid-sized companies, we propose that the Fed be authorized to lend on a junior lien basis , in order to better navigate the legal barriers associated with the rights of existing secured creditors. Since the Fed is not in a position to make credit assessments of corporate borrowers, especially in riskier positions, we suggest that such funds would only be distributed on a matching basis with or by providing a partial guarantee to banks and other private lenders. Involvement of private lenders with the expertise to identify whether a company is only suffering from short-term liquidity needs or whether there are also long-term solvency issues is key to efficient allocation of capital. The debt should be priced at market rates and possibly carry significant equity warrants or convertibility rights to make the equity holders share losses and compensate the taxpayers (and matching investors) for the risk incurred.
- Permit the Fed to lend to companies in bankruptcy. Government does not tend to lend to companies in bankruptcy proceedings. Nor should the taxpayer ever be expected to lend to a bankrupt business. That said, companies often enter Chapter 11 bankruptcy proceedings as part of a standard, pre-planned capital restructuring, from which they can exit in as little as a month. Any loans made to the company while it is in Chapter 11 can be structured as super senior debt, taking precedence over all other company obligations. As an alternative to subordinated lending, therefore, we would suggest that the Fed be permitted, on a matching basis with other investors, to lend to companies that are entering bankruptcy as part of an orderly capital restructuring. For this to be a feasible source of liquidity financing, the act would need to enable streamlining of the bankruptcy process so as to permit more “pre-packaged” bankruptcy proceedings that could be entered into and confirmed quickly.
It could be argued that changes of the sort that we recommend could set a dangerous precedent and run the risk of creating moral hazard, if companies and institutional investors come to believe that the government will always pick up the tab when things go wrong. This is an important point, but focusing solely on it is dangerous. The pandemic is a rapid and severe external shock that affects nearly all players the same way. Debt markets are complex and heavily segmented; relying on private markets alone in the short-term will only put more companies out of business and more people out of jobs. The interventions we advocate here, however, will leverage the resources and skills available in the financial markets, speeding up what could be described as a national Chapter 11 proceedings, from which the economy will emerge less damaged as the shock subsides and markets return to normal.
If our content helps you to contend with coronavirus and other challenges, please consider subscribing to HBR . A subscription purchase is the best way to support the creation of these resources.
- MH Mike Harmon is the Managing Partner at Gaviota Advisors, LLC; his previous experience includes over twenty years as a special-situations investor with Oaktree Capital Management.
- VI Victoria Ivashina is the Lovett-Learned Professor at Harvard Business School in Boston and a research associate at the National Bureau of Economic Research.
Partner Center
Business Financial Problem Solving Solutions
About our firm – a leading business financial problem solutions provider.
As a leading Business Financial problem Solutions Provider, we examine the financial opportunities and challenges of our clients. We seek to know how our clients can efficiently navigate their financial challenges and benefit from the new opportunities that emerge in the changing business environment. Our services include estate planning & trusts, business accounting and bookkeeping, tax services, and financial problem-solving strategies among others. We understand that businesses encounter many financial problems, and we are ready to help.
Below are some of the financial problems and the solutions that we offer.
Slow-paying invoices
As a business, it is important to offer 30-day – 60-day payment terms to all customers. But, a small business cannot afford to wait for that long for their payment. Such businesses require money sooner. Ultimately, slow payments will create financial problems that can affect such companies seriously.
As far as we are concerned, this problem can be solved in two ways:
- Providing customers with incentives that will make them pay faster. For example, giving them two percent (2%) discount in exchange for payments that are made in ten days earlier can actually motivate them to pay faster.
- Invoice factoring can also be used to finance all the slow-paying invoices. This is one of the methods that will immediately improve cash flow and enable businesses to offer confidently payment terms.
High overhead expenses
Sometimes, overhead expenses such as telephone, rent, and utilities among others can be higher compared to the income the business receives. High costs of running a business can hurt the cash flow of that particular business. They are particularly very challenging since they are persistent.
We believe that auditing the overhead expenses and cutting back where possible is the best solution for such as problem. This should regularly be done to make sure that the overhead expenses are in line. The owner of the business should be careful not to cut these costs so much. This is because that will also hurt the business. In case it is not possible to cut the overhead expenses of the business, then it is important to consider other cheaper options.
Excess inventory
This is one of the problems that affect businesses that manufacture goods, or the re-sellers that keep warehouses stocked with goods. In case too many goods are purchased or made which might end up sitting on shelves and tying up the flow of the business cash. This results in financial problems.
We believe that such business should fine-tune their inventory so that they stock goods for a short time before being used in the manufacturing process or sold. As a business, it is crucial to know that you need to stock goods depending on volume, available cash, sales forecasts, and the capabilities of the supplier.
Furthermore, businesses that re-sell goods can also use purchase order financing when financing huge sales that surpass the capabilities of their cash flow.
Other Business Financial problem solutions that we offer
Too much bad debt
We know that bad debts happen when a business sell their products or provide services to clients who don’t pay.
Review the creditworthiness of your customers before you extend payment terms.
Insufficient gross margins
We understand that small companies at times sell their services and goods for lower prices that they experience negative or low gross margins. This is common in high competitive environments with pricing pressure that is constant.
As far as we are concerned, the business should audit their services and goods to decide the all-inclusive cost of delivering their services and products.
The above are some of the financial problems that business can encounter and the solutions that we offer.
Fogarty & Associates are proud members of the American Institute of CPAs is the world’s largest member association representing the accounting profession, with more than 412,000 members in 144 countries, and a history of serving the public interest since 1887.
The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments.
Fogarty & Associates are also proud members of Wisconsin Institute of Certified Public Accountants is the premier professional organization for Wisconsin CPAs, with nearly 8,000 members working in public accounting, industry, government, nonprofit and education.
Appointment Details
Job Loss and Unemployment Stress
Dealing with uncertainty, elder scams and senior fraud abuse, benefits of mindfulness, stress and your health, stress management, burnout prevention and treatment, quick stress relief.
- Online Therapy: Is it Right for You?
- Mental Health
- Health & Wellness
- Children & Family
- Relationships
Are you or someone you know in crisis?
- Bipolar Disorder
- Eating Disorders
- Grief & Loss
- Personality Disorders
- PTSD & Trauma
- Schizophrenia
- Therapy & Medication
- Exercise & Fitness
- Healthy Eating
- Heart Health
- Illness & Disability
- Weight Loss
- Work & Career
- Well-being & Happiness
- Childhood Issues
- Learning Disabilities
- Family Caregiving
- Teen Issues
- Communication
- Emotional Intelligence
- Love & Friendship
- Domestic Abuse
- Healthy Aging
- Aging Issues
- Alzheimer’s Disease & Dementia
- Senior Housing
- End of Life
- Meet Our Team
- Jeanne Segal, Ph.D.
- Harvard Health Partnership
- Audio Meditations
- Comments and Questions
- Report an Error
- Reprints/Permission Request
- Testimonials
Understanding financial stress
Effects of financial stress on your health, tip 1: talk to someone, tip 2: take inventory of your finances, tip 3: make a plan—and stick to it, tip 4: create a monthly budget, tip 5: manage your overall stress, coping with financial stress.
Feeling overwhelmed by money worries? Whatever your circumstances, there are ways to get through these tough economic times, ease stress and anxiety, and regain control of your finances.
If you’re worried about money, you’re not alone. Many of us, from all over the world and from all walks of life, are having to deal with financial stress and uncertainty at this difficult time. Whether your problems stem from a loss of work, escalating debt, unexpected expenses, or a combination of factors, financial worry is one of the most common stressors in modern life. Even before the global coronavirus pandemic and resulting economic fallout, an American Psychological Association (APA) study found that 72% of Americans feel stressed about money at least some of the time. The recent economic difficulties mean that even more of us are now facing financial struggles and hardship.
Like any source of overwhelming stress, financial problems can take a huge toll on your mental and physical health, your relationships, and your overall quality of life. Feeling beaten down by money worries can adversely impact your sleep, self-esteem, and energy levels. It can leave you feeling angry, ashamed, or fearful, fuel tension and arguments with those closest to you, exacerbate pain and mood swings, and even increase your risk of depression and anxiety. You may resort to unhealthy coping mechanisms, such as drinking, abusing drugs, or gambling to try to escape your worries. In the worst circumstances, financial stress can even prompt suicidal thoughts or actions. But no matter how hopeless your situation seems, there is help available. By tackling your money problems head on, you can find a way through the financial quagmire, ease your stress levels, and regain control of your finances—and your life.
While we all know deep down there are many more important things in life than money, when you’re struggling financially fear and stress can take over your world. It can damage your self-esteem, make you feel flawed, and fill you with a sense of despair. When financial stress becomes overwhelming, your mind, body, and social life can pay a heavy price.
[Read: Stress Symptoms, Signs, and Causes]
Financial stress can lead to:
Insomnia or other sleep difficulties. Nothing will keep you tossing and turning at night more than worrying about unpaid bills or a loss of income.
Weight gain (or loss). Stress can disrupt your appetite, causing you to anxiously overeat or skip meals to save money.
Depression. Living under the cloud of money problems can leave anyone feeling down, hopeless, and struggling to concentrate or make decisions. According to a study at the University of Nottingham in the UK, people who struggle with debt are more than twice as likely to suffer from depression .
Anxiety. Money can be a safety net; without it, you may feel vulnerable and anxious. And all the worrying about unpaid bills or loss of income can trigger anxiety symptoms such as a pounding heartbeat, sweating, shaking, or even panic attacks.
Relationship difficulties. Money is often cited as the most common issue couples argue about. Left unchecked, financial stress can make you angry and irritable, cause a loss of interest in sex, and wear away at the foundations of even the strongest relationships .
Social withdrawal. Financial worries can clip your wings and cause you to withdraw from friends, curtail your social life, and retreat into your shell—which will only make your stress worse.
Physical ailments such as headaches, gastrointestinal problems, diabetes, high blood pressure , and heart disease. In countries without free healthcare, money worries may also cause you to delay or skip seeing a doctor for fear of incurring additional expenses.
Unhealthy coping methods , such as drinking too much , abusing prescription or illegal drugs, gambling, or overeating. Money worries can even lead to self-harm or thoughts of suicide.
If you are feeling suicidal…
Your money problems may seem overwhelming and permanent right now. But with time, things will get better and your outlook will change, especially if you get help. There are many people who want to support you during this difficult time, so please reach out!
Read Are You Feeling Suicidal? , call 1-800-273-TALK in the U.S., or find a helpline in your country at IASP or Suicide.org .
The vicious cycle of poor financial health and poor mental health
A number of studies have demonstrated a cyclical link between financial worries and mental health problems such as depression, anxiety, and substance abuse.
Financial problems adversely impact your mental health. The stress of debt or other financial issues leaves you feeling depressed or anxious.
The decline in your mental health makes it harder to manage money. You may find it harder to concentrate or lack the energy to tackle a mounting pile of bills. Or you may lose income by taking time off work due to anxiety or depression.
These difficulties managing money lead to more financial problems and worsening mental health problems, and so on. You become trapped in a downward spiral of increasing money problems and declining mental health.
No matter how bleak your situation may seem at the moment, there is a way out. These strategies can help you to break the cycle, ease the stress of money problems, and find stability again.
When you’re facing money problems, there’s often a strong temptation to bottle everything up and try to go it alone. Many of us even consider money a taboo subject, one not to be discussed with others. You may feel awkward about disclosing the amount you earn or spend, feel shame about any financial mistakes you’ve made, or embarrassed about not being able to provide for your family. But bottling things up will only make your financial stress worse. In the current economy, where many people are struggling through no fault of their own, you’ll likely find others are far more understanding of your problems.
[Read: Social Support for Stress Relief]
Not only is talking face-to-face with a trusted friend or loved one a proven means of stress relief, but speaking openly about your financial problems can also help you put things in perspective. Keeping money worries to yourself only amplifies them until they seem insurmountable. The simple act of expressing your problems to someone you trust can make them seem far less intimidating.
- The person you talk to doesn’t have to be able to fix your problems or offer financial help.
- To ease your burden, they just need to be willing to talk things out without judging or criticizing.
- Be honest about what you’re going through and the emotions you’re experiencing.
- Talking over your worries can help you make sense of what you’re facing and your friend or loved one may even be able to come up with solutions that you hadn’t thought of alone.
Getting professional advice
Depending on where you live, there are a number of organizations that offer free counseling on dealing with financial problems, whether it’s managing debt, creating and sticking to a budget, finding work, communicating with creditors, or claiming benefits or financial assistance. (See the “Get more help” section below for links).
Whether or not you have a friend or loved one to talk to for emotional support, getting practical advice from an expert is always a good idea. Reaching out is not a sign of weakness and it doesn’t mean that you’ve somehow failed as a provider, parent, or spouse. It just means that you’re wise enough to recognize your financial situation is causing you stress and needs addressing.
Speak to a Licensed Therapist
Opening up to your family
Financial problems tend to impact the whole family and enlisting your loved ones’ support can be crucial in turning things around. Even if you take pride in being self-sufficient, keep your family up to date on your financial situation and how they can help you save money.
Let them express their concerns. Your loved ones are probably worried—about both you and the financial stability of your family unit. Listen to their concerns and allow them to offer suggestions on how to resolve the financial problems you’re facing.
Make time for (inexpensive) family fun. Set aside regular time where you can enjoy each other’s company, let off steam, and forget about your financial worries. Walking in the park, playing games, or exercising together doesn’t have to cost money but it can help ease stress and keep the whole family positive.
If you’re struggling to make ends meet, you may think you can ease your stress by leaving bills unopened, avoiding phone calls from creditors, or ignoring bank and credit card statements. But denying the reality of your situation will only make things worse in the long run. The first step to devising a plan to solve your money problems is to detail your income, debt, and spending over the course of at least one month.
A number of websites and smartphone apps can help you keep track of your finances moving forward or you can work backwards by gathering receipts and examining bank and credit card statements. Obviously, some money difficulties are easier to solve than others, but by taking inventory of your finances you’ll have a much clearer idea of where you stand. And as daunting or painful as the process may seem, tracking your finances in detail can also help you start to regain a much-needed sense of control over your situation.
Include every source of income. In addition to any salary, include bonuses, benefits, alimony, child support, or any interest you receive.
Keep track of ALL your spending. When you’re faced with a pile of past-due bills and mounting debt, buying a coffee on the way to work may seem like an irrelevant expense. But seemingly small expenses can mount up over time, so keep track of everything. Understanding exactly how you spend your money is key to budgeting and devising a plan to address your financial problems.
List your debts. Include past-due bills, late fees, and list minimum payments due as well as any money you owe to family or friends.
Identify spending patterns and triggers. Does boredom or a stressful day at work cause you to head to the mall or start online shopping? When the kids are acting out, do you keep them quiet with expensive restaurant or takeout meals, rather than cooking at home ? Once you’re aware of your triggers you can find healthier ways of coping with them than resorting to “retail therapy”.
Look to make small changes. Spending money on things like a morning newspaper, lunchtime sandwich, or break-time cigarettes can add up to a significant monthly outlay. While it may be unreasonable to deny yourself every small pleasure, cutting down on nonessential spending and finding small ways to reduce your daily expenditure can really help to free up extra cash to pay off bills.
Eliminate impulse spending. Ever seen something online or in a shop window that you just had to buy? Impulsive buying can wreck your budget and max out your credit cards. To break the habit, try making a rule that you’ll wait a week before making any new purchase.
Go easy on yourself. As you review your debt and spending habits, remember that anyone can get into financial difficulties, especially at times like this . Don’t use this as an excuse to punish yourself for any perceived financial mistakes. Give yourself a break and focus on the aspects you can control as you look to move forward.
When your financial problems go beyond money
Sometimes, the causes for your financial difficulties may lie elsewhere. For example, money troubles can stem from problem gambling , fraud abuse , or a mental health issue, such as overspending during a bipolar manic episode .
To prevent the same financial problems recurring, it’s imperative you address both the underlying issue and the money troubles it’s created in your life.
Just as financial stress can be caused by a wide range of different money problems, so there are an equally wide range of possible solutions. The plan to address your specific problem could be to live within a tighter budget, lower the interest rate on your credit card debt, curb your online spending, seek government benefits, declare bankruptcy, or to find a new job or additional source of income.
If you’ve taken inventory of your financial situation, eliminated discretionary and impulse spending, and your outgoings still exceed your income, there are essentially three choices open to you: increase your income, lower your spending, or both. How you go about achieving any of those goals will require making a plan and following through on it.
- Identify your financial problem. Having taken inventory, you should be able to clearly identify the financial problem you’re facing. It may be that you have too much credit card debt, not enough income, or you overspend on unnecessary purchases when you feel stressed or anxious. Or perhaps, it’s a combination of problems. Make a separate plan for each one.
- Devise a solution. Brainstorm ideas with your family or a trusted friend, or consult a free financial counseling service. You may decide that talking to credit card companies and requesting a lower interest rate would help solve your problem. Or maybe you need to restructure your debt, eliminate your car payment, downsize your home, or talk to your boss about working overtime.
- Put your plan into action. Be specific about how you can follow through on the solutions you’ve devised. Perhaps that means cutting up credit cards, networking for a new job , registering at a local food bank, or selling things on eBay to pay off bills, for example.
- Monitor your progress. As we’ve all experienced recently, events that impact your financial health can happen quickly, so it’s important to regularly review your plan. Are some aspects working better than others? Do changes in interest rates, your monthly expenses, or your hourly wage, for example, mean you should revise your plan?
- Don’t get derailed by setbacks. We’re all human and no matter how tight your plan, you may stray from your goal or something unexpected could happen to derail you. Don’t beat yourself up, but get back on track as soon as possible.
The more detailed you can make your plan, the less powerless you’ll feel over your financial situation.
Whatever your plan to relieve your financial problems, setting and following a monthly budget can help keep you on track and regain your sense of control.
- Include everyday expenses in your budget, such as groceries and the cost of traveling to work, as well as monthly rent, mortgage, and utility bills.
- For items that you pay annually, such as car insurance or property tax, divide them by 12 so you can set aside money each month.
- If possible, try to factor in unexpected expenses, such as a medical co-pay or prescription charge if you fall sick, or the cost of home or car repairs.
- Set up automatic payments wherever possible to help ensure bills are paid on time and you avoid late payments and interest rate hikes.
- Prioritize your spending. If you’re having trouble covering your expenses each month, it can help to prioritize where your money goes first. For example, feeding and housing yourself and your family and keeping the power on are necessities. Paying your credit card isn’t—even if you’re behind on your payments and have debt collection companies harassing you.
- Keep looking for ways to save money. Most of us can find something in our budget that we can eliminate to help make ends meet. Regularly review your budget and look for ways to trim expenses.
- Enlist support from your spouse, partner, or kids. Make sure everyone in your household is pulling in the same direction and understands the financial goals you’re working towards.
Resolving financial problems tends to involve small steps that reap rewards over time. In the current economic climate, it’s unlikely your financial difficulties will disappear overnight. But that doesn’t mean you can’t take steps right away to ease your stress levels and find the energy and peace of mind to better deal with challenges in the long-term.
[Read: Stress Management]
Get moving. Even a little regular exercise can help ease stress, boost your mood and energy, and improve your self-esteem. Aim for 30 minutes on most days, broken up into short 10-minute bursts if that’s easier.
Practice a relaxation technique. Take time to relax each day and give your mind a break from the constant worrying. Meditating , breathing exercises, or other relaxation techniques are excellent ways to relieve stress and restore some balance to your life.
Don’t skimp on sleep. Feeling tired will only increase your stress and negative thought patterns. Finding ways to improve your sleep during this difficult time will help both your mind and body.
Boost your self-esteem. Rightly or wrongly, experiencing financial problems can cause you to feel like a failure and impact your self-esteem. But there are plenty of other, more rewarding ways to improve your sense of self-worth. Even when you’re struggling yourself, helping others by volunteering can increase your confidence and ease stress, anger, and anxiety—not to mention aid a worthy cause. Or you could spend time in nature, learn a new skill, or enjoy the company of people who appreciate you for who you are, rather than for your bank balance.
Eat healthy food. A healthy diet rich in fruit, vegetables, and omega-3s can help support your mood and improve your energy and outlook. And you don’t have to spend a fortune; there are ways to eat well on a budget .
Be grateful for the good things in your life. When you’re plagued by money worries and financial uncertainty , it’s easy to focus all your attention on the negatives. While you don’t have to ignore reality and pretend everything’s fine, you can take a moment to appreciate a close relationship, the beauty of a sunset, or the love of a pet, for example. It can give your mind a break from the constant worrying, help boost your mood, and ease your stress.
Find financial resources
Find U.S. Government Services and Information including Dealing with Debt , Unemployment Help , and Getting Help with Living Expenses . Or call 1-844-872-4681. (USA gov)
Get help with debt and housing problems from Citizens Advice , contact a free debt service at National Debtline or Stepchange , or seek free financial advice from the government’s Money Advice Service .
Find Government Services , get free Financial Counselling or call the National Debt Helpline at 1800 007 007.
Find government services and information for Managing Debt and Benefits .
More Information
- Managing Job Loss and Financial Stress - Helping yourself and your family cope with stress and financial worries following job loss. (University of Hawaii)
- Managing Debt - Steps you can take to deal with debt. (Federal Trade Commission)
- Managing money and budgeting - Tips for creating a family budget. (raisingchildren.net.au)
- Make a Budget - Simple worksheet to help you create a budget. (Federal Trade Commission)
- Money Stress Weighing on Americans’ Health - Details of the 2015 Stress in America: Paying with Our Health survey from the American Psychological Association. (APA)
- Trauma- and Stressor-Related Disorders. (2013). In Diagnostic and Statistical Manual of Mental Disorders . American Psychiatric Association. Link
- Inc, Gallup. “The U.S. Healthcare Cost Crisis.” Gallup.com. Accessed November 16, 2021. Link
- Anderson, Norman B, Cynthia D Belar, Steven J Breckler, Katherine C Nordal, David W Ballard, Lynn F Bufka, Luana Bossolo, Sophie Bethune, Angel Brownawell, and Katelynn Wiggins. Stress in America: Paying with our Health. “AMERICAN PSYCHOLOGICAL ASSOCIATION,” n.d., 23. Link
- Ramsey Solutions. “Money, Marriage, and Communication.” Accessed November 16, 2021. Link
- “At What Costs? Student Loan Debt, Debt Stress, and Racially/Ethnically Diverse College Students’ Perceived Health. – PsycNET.” Accessed November 16, 2021. Link
- Richardson, Thomas, Peter Elliott, and Ronald Roberts. “The Relationship between Personal Unsecured Debt and Mental and Physical Health: A Systematic Review and Meta-Analysis.” Clinical Psychology Review 33, no. 8 (December 1, 2013): 1148–62. Link
- Warth, Jacqueline, Marie-Therese Puth, Judith Tillmann, Johannes Porz, Ulrike Zier, Klaus Weckbecker, and Eva Münster. “Over-Indebtedness and Its Association with Sleep and Sleep Medication Use.” BMC Public Health 19, no. 1 (July 17, 2019): 957. Link
- Saleh, Dalia, Nathalie Camart, Fouad Sbeira, and Lucia Romo. “Can We Learn to Manage Stress? A Randomized Controlled Trial Carried out on University Students.” PLOS ONE 13, no. 9 (September 5, 2018): e0200997. Link
- “Stress, Social Support, and the Buffering Hypothesis. – PsycNET.” Accessed November 15, 2021. Link
- Salmon, P. “Effects of Physical Exercise on Anxiety, Depression, and Sensitivity to Stress: A Unifying Theory.” Clinical Psychology Review 21, no. 1 (February 2001): 33–61. Link
- Toussaint, Loren, Quang Anh Nguyen, Claire Roettger, Kiara Dixon, Martin Offenbächer, Niko Kohls, Jameson Hirsch, and Fuschia Sirois. “Effectiveness of Progressive Muscle Relaxation, Deep Breathing, and Guided Imagery in Promoting Psychological and Physiological States of Relaxation.” Evidence-Based Complementary and Alternative Medicine 2021 (July 3, 2021): e5924040. Link
More in Stress
Coping with the stress of losing a job
How to cope with events in life outside your control
Preventing and dealing with financial exploitation
Try online therapy
Get professional help from BetterHelp's network of 20,000 licensed therapists. Get matched and schedule your first video, phone or live chat session.
Practices for improving emotional and physical well-being
How stress management helps fight disease
Using self-help techniques for dealing with stress
Techniques for dealing with overwhelming stress
Using your senses to relieve stress on the spot
Help us help others
Millions of readers rely on HelpGuide.org for free, evidence-based resources to understand and navigate mental health challenges. Please donate today to help us save, support, and change lives.
CEOWORLD magazine - Top Stories - C-Suite Advisory - The Most Common Causes of Finance Problems in Business
The Most Common Causes of Finance Problems in Business
Operating a successful company comes with a whole list of challenges, not least of which is maintaining a healthy level of financial stability. After all, any business that is dealing with cash flow and budgeting problems will eventually go under if these issues aren’t rectified in a timely manner. Although every company faces its own unique set of circumstances, there are certain issues that businesses in all industries are bound to face at one point or another. To help you prepare for such stumbling blocks, we’ve compiled the following list of the most common causes of financial problems in business:
1. Lack of Cash Flow
Without sufficient available capital, you can’t afford to pay your bills let alone invest in efforts that will help you grow the business. If your business credit isn’t horrible, you can probably get approved for fast business funding that can provide the cash flow needed to start paying your dues and making moves again. Every business does better when it isn’t strapped for cash, which brings us to our next common cause.
2. Bootstrapping
There are two opposing schools of thought when it comes to funding a business – fund everything out of pocket (bootstrapping) or get investors and lenders to fund the business for you. While bootstrapping has its advantages, it is one of the fastest ways to find your company backed against the wall financially. Ideally, you’ll want to use a balanced approach, covering most of the expenses out of pocket but then still utilizing external funding to provide a safety cushion. Studies show that bootstrapped businesses are twice as likely to fail than those that are funded externally.
3. Excessive Ad Spending
Many businesses can fall into the trap of spending too much money on promotion without actually studying the art of advertising in-depth . Untargeted ads can often turn out to be a futile waste of funds, and simply pouring more money into an advertising budget is not the solution. Likewise, outsourcing everything to a marketing agency might not be in your best interest either as they can charge steep fees and won’t necessarily provide enhanced results. Instead, take time to learn advertising yourself so that you can make more informed decisions with your ad spend.
4. Poor Accounting Practices
Accounting and budgeting are the two most crucial aspects of financial management in business, so inefficient processes and oversights in either of these areas can lead to a great deal of trouble. While you don’t necessarily need to pay a professional accountant, you should at least take some courses on how to use popular accounting software.
Unnecessary Expenditure
Finally, the one issue that most businesses with financial problems have in common is excessive expenditure commitments . Newer companies like to make themselves look more successful than they actually are, which can lead to having an oversized office, fancy company vehicles, cell phones, a decked out waiting room, top of the line equipment, and a bunch of other unnecessary splurging that only creates debt and overhead. Take a humble, minimalist approach and you’ll be rewarded with more cash flow to spend on things that actually matter.
Have you read?
World’s Best Countries To Invest In Or Do Business For 2018 RANKED: The World’s Top 10 Richest Countries (2017-2027) Revealed: Top Rated Visitor Attractions In Every Country In The World The World’s Safest Cities Ranking, 2018
Megan Batchelor
The moment that Lehman Brothers lost the plot – when they abandoned their ‘Strategic Core’
Activities And Gifts That Will Make This Father’s Day Unique
Is Santa Claus Real? A Common Question For Many Kids
”Emotional” Gifts for the Mother’s Day
5 Steps to Promote Yourself
1-800-488-6040
- My Career or Business
- My Health & Vitality
- My Mental Health
- My Finances & Building Wealth
- My Relationship
- My Leadership Skills
- My Productivity
- Growth Solutions
- About Tony Robbins
- The Science of Tony Robbins
- Contribution
- Company Culture
- Get Involved
- Success Stories
- Case Studies
- Events Calendar
- Unleash the Power Within
- Business Mastery
- Date With Destiny
- Life Mastery Virtual
- Wealth Mastery Virtual
- September 2023
- October 2023
- Leadership Academy
- Inner Circle Community
- Pinnacle Enterprise
- Platinum Partnership
- Unleash Her Power Within
- Business Coaching
- Results Coaching
- Business Results Training
- Life Coaching
- Health Coaching
- Meet Tony’s Coaches
- All Products
- Nutraceuticals
- Life Force Book
- Tony Robbins Books
- Training Systems
- Breakthrough App
- Netflix Documentary
- Free Tools & Quizzes
Home » Business Cycle » Common business problems
9 common business problems
Your business is moving along, delivering on its product or service, when its wheels seemingly get stuck on the tracks. Perhaps it’s an employee issue or trouble with delivering your product to customers. Whatever the business problem may be, it has a ripple effect on the rest of your business.
Does this sound familiar? You’re not alone. If you’re running a small company or startup, you have likely already faced some common business problems – and if you haven’t, you will soon. In order to solve business challenges , it’s essential to be prepared, identify them early and make a plan to overcome them.
Discover your strengths as a business owner – and crush your problems
Identifying common business problems
When determining what issues your company is currently facing, it helps to break your business challenges into two sections: current business problems that you can quickly fix, and deeper business problems that require more intensive repair.
Some examples of current, surface-level problems are:
1. Employee turnover rate
2. increase in competition, 3. falling sales, deeper business issues.
You certainly need to fix issues like that, but they likely aren’t the root of the problems your business is facing. In order to succeed, you need to get to the core of what’s really holding your company back. For most businesses, they fall into one of nine categories .
Nine most common business problems
Every business experiences problems, regardless of your industry, business size or the phase of the business cycle you are in. If your business is stagnant, you feel stuck or you’re not experiencing the growth you desire, be on the lookout for these nine common business problems .
1. You don’t know your purpose
Does your company feel adrift? Do you change your mission statement constantly? If so, you’re experiencing one of the most common business problems – lack of purpose.
Being a strong leader is synonymous with having a sense of purpose . When you truly believe you will be successful, you will see your business thrive. Your purpose gives you passion, drive and certainty. It gives you the ability to overcome towering obstacles.
A business is only as strong as the psychology of its leader . It’s up to you to do the work and bring purpose to your company.
2. You don’t have a strong brand identity
One of the biggest business problems in the growth stage is not settling on who they are. Developing your brand identity is vital to your marketing and sales success. Your identity epitomizes what your company stands for – your core values , mission and goals. It deeply affects your company culture, which in turn affects whether you can hire and retain the best employees for the job.
Your brand identity is what drives the emotional connection with your consumer and ultimately creates customer loyalty . Without a strong brand identity, you don’t actually know who you are or what direction you’re going . Without that direction, you won’t know what audience to target – and you definitely won’t inspire raving fan customers .
3. You’re not providing value
Shrinking profits is among the common business problems . Left alone, they can lead to bankruptcy. When this happens it’s easy to shrug it off and blame the market. But if the market shifts, it’s for a reason. If customers are going to your competitor because they offer a service or feature that you don’t, that is because they deem that service or feature valuable. When you don’t provide what the customer desires, you’re not providing them with value.
To be successful in business, you must practice constant strategic innovation . Determine your X-factor – what sets you apart from the competition? How do you bring more value to your customers? What makes your company talkably different ? If you don’t know the answers to these questions, it’s time to sit down and think about them.
4. You haven’t planned ahead
Purpose and identity are crucial to your success, but don’t forget about making a plan. And don’t just make any plan – make a massive action plan (MAP). Making a MAP instead of a traditional plan allows you to stay agile in response to business challenges while always keeping your eye on the prize.
For example, most business owners aren’t prepared for a recession despite the fact that the economy has spent over 60% of its time in a recession since 1879. It’s easy to feel confident during good times, but it’s the hardships that matter. A MAP acknowledges and addresses how your business will fare if there is a downturn in your income, whether it comes from a recession or the shifting valuation of your product or service. If you haven’t built your business stoutly enough to weather potential storms, you won’t sail far at all. Get prepared for a recession and other negative economic possibilities before they happen.
5. You don’t have an exit strategy
No one wants to think about the end of their business, which is why so few owners bother with developing exit strategies . But the goal of your business is for you to eventually leave. This could come in the form of arranging a leveraged buy-out , leaving the business to your children or selling the business to key employees. The point is, knowing what the preferred end of your company will look like helps you develop the best path to get there.
Forty-five percent of business owners spend over 40 hours a week in the office and never find a way to extricate themselves so they can pursue other passions. Sound like you? It’s definitely time to start working on your exit strategy.
6. You’re controlled by uncertainty and fear
Nothing in this life is ever guaranteed, but new business owners often allow the fear of uncertainty to affect how they run their organizations. Fear of failure, fear of not being a good enough leader and fear of the economy’s future can put you in a scarcity mindset and negatively affect decisions and behaviors. By becoming hyper-focused on these things, you set your business up for failure instead of taking the steps necessary to achieve success.
If you have these fears, identify if they are based on limiting beliefs . Change those beliefs to empowering ones that help you thrive as a leader. Instead of letting fear ruin your business, use that fear to push you to greater heights. When you decide that success will happen no matter what, many of your business problems will resolve themselves along the way.
7. You’re not harnessing the power of technology
New entrepreneurs often make the mistake of thinking they don’t need technology. Some think this because they have an old-school mindset and don’t realize all the powerful pieces of tech that are available. Others think that they are in a type of business that doesn’t need technology to succeed. In today’s economy, harnessing the power of technology is a requirement if you want to avoid being disrupted by competitors.
From artificial intelligence to automation, emerging tech has a place in every business no matter how large or small. Address these common business problems by having strategic innovation meetings with your team to discuss new technology and how it can be incorporated into your business to beat your competition .
8. You lack the right skills
Tony tells us that “Success is 80% psychology and 20% mechanics.” It’s vital to shift your mindset, control your emotions and be decisive in business. Yet it is also vital to take a realistic look at your strengths and weaknesses. Business owners need certain skills, like reading financial statements , hiring the right employees and scaling mindfully .
Your own psychology and skillset is the foundation you’ll build the rest of your business around. If you don’t seal the cracks and strengthen the base, you can’t build a sturdy structure. You can develop these skills if you desire – or you can outsource them so that you have the time to focus on other aspects of the business. Being honest about what business challenges you face now or are likely to face in the future is the foundation you need to scale your business in a solid manner.
9. You won’t ask for help
If you find you lack certain skills, one of the biggest business challenges you can face is your own inability to reach out to available resources. Being a great leader doesn’t mean that you have all the solutions – but it does mean that you use everything at your disposal to get the job done. One of the top traits of a leader is resourcefulness. The best leaders leverage what they do have in order to fill in the gaps – especially when it comes to their businesses.
Stop telling yourself the story that “strong leaders don’t ask for support.” Once you do, you’ll find that business help is out there. Sign up for a free CEO Strategy Session and discover new strategies that will skyrocket you to success. You won’t just solve your current business challenges – you’ll also create a blueprint for lasting change throughout your organization.
Examples of companies experiencing problems
Even the biggest businesses were startups once. No matter what type of industry you’re in, you’re probably experiencing the same challenges faced by businesses around the world. Though they seem unique to you and your team, they are often universal. How do you view the business problems you face? Are they obstacles or are they opportunities for growth ?
Apple overcame numerous business challenges – and near bankruptcy – before becoming the force of nature they are today. And they didn’t do it by thinking small. When sales were down, they didn’t think about how to sell more computers. They turned to marketing and innovation to solve their problems and ended up creating the iPhone.
Another business that experienced and overcame problems is Starbucks . This billion-dollar coffee chain saw its earnings drop by more than half during the 2008 recession. The company brought back CEO Howard Schultz to right the ship, and he showed exemplary crisis leadership : He asked himself what business they were in – and it wasn’t coffee. He put the focus back on the customer and brought the company back from the brink of failure.
Remember, business problems are just opportunities in disguise. It’s time to stop living in fear of what’s to come and start building the skills and mindset you need to overcome any challenge.
Ready to crush your business problems?
Discover how to defeat common business problems with Tony Robbins’ free 7 Forces of Business Mastery content series.
© 2023 Robbins Research International, Inc. All rights reserved.
Table of Contents
Creating a reliable cash flow forecast, accepting payments online, getting customers to pay on time, setting up an online store, keeping costs down, how to solve 5 stressful financial challenges facing small businesses.
Running a small business is hard — especially staying in the black at the beginning. Here’s how to solve some common financial challenges.
Your email is on the way!
Email This Article
Justworks Privacy Policy
This post was contributed by Nell Gable, Content Marketing Manager at PaySimple , a commerce platform that helps small business automate service marketing, management, and payment collection.
Thousands of Americans dream of following a passion and starting their own small business — and each month, nearly 543,000 entrepreneurs make that dream a reality.
Yet, becoming a business owner doesn’t necessarily equip you with the skills necessary to sort out the financial side of things. Nearly 80% of businesses fail in their first 18 months of existence. The main reason behind this sad fact?
Most simply run out of money.
If you’re fretting over the financial management of your small business, you’re not alone. Here are the five most stressful financial challenges small businesses face:
Creating a reliable cash flow forecast is one of the most challenging components of setting up a small business. Not only does it require an incredibly tight grasp of the inner and outer workings of your company’s finances, it requires you to be brutally honest with yourself. Fudging numbers and giving yourself the benefit of the doubt will do nothing but harm your business in this case.
The Solution:
Even the most conservative cash flow forecast can fall apart if payments come in late or you get hit with an unexpected expense.
That’s why it’s important to set yourself up for success by optimizing the systems you can control. Your clients will inevitably pay late at times, but what can you do to ensure it’s as easy as possible for them to hold up their end of the deal?
Here are a few safeguards to consider implementing:
Set up recurring billing as a way of improving customer experience so you can retain more consistent business and get paid regularly.
Partner with a payment solution that provides automatic payment reminders so you can stop chasing checks and focus your attention on more strategic thinking.
Productize your service offerings so you don’t need to create a custom line item for every transaction.
For more advice on creating a reliable cashflow, check out this post .
Not surprisingly, as our reliance on technology has increased in recent years, our dependence on cash and paper checks as payment methods has decreased significantly. A study by the Federal Reserve showed that payment through checks has gone down sharply each year, with only 15% of payments made by check in 2012 . And 10% of Americans don’t carry any cash at all.
What does that mean for small business owners? If you’re not accepting online payments, you are at risk to lose business to competitors who are.
Breathe easy — accepting online payments is easier than you might think.
Start by establishing a merchant account. When setting up a merchant account, businesses have two options. The first is to get a dedicated account provisioned solely for your business.
This can be done through payment commerce platforms like PaySimple and requires going through an application process to ensure your business is in good credit standing. Once you are set up with a dedicated account, you retain full control of keeping your account in good standing.
The other option for setting up a merchant account is to take part in an aggregated account (like PayPal) where a single merchant account provides payment processing for an entire portfolio of businesses. This option is less regulated and faster to set up, but because you share financial liability with other businesses, they can put your credit at risk, so be sure to partner with a reputable merchant.
For a detailed list of all the ways you can accept online payments, check out this article .
Business Expenses: A Beginner's Guide To Building A Plan
Why do businesses need an accountable expense plan?
Thanks for downloading!
If the requested file does not load in a new window, click here .
Download Your eBook Today
Whether you’ve been in business for years or you’re a newly minted entrepreneur, late payments are likely a major thorn in your side.
Getting customers to pay on time is one of the most time consuming challenges a small business faces. And as we mentioned before, late payments can have major consequences for your cash flow forecasting and could even hinder your ability to make payroll or pay debt.
The single most effective approach you can take for preventing late payments is to streamline your customers’ payment experience. By making it easy to pay bills, ideally on an automatically recurring basis, your customers will stay happier and so will you. Find a payment solution platform that makes it easy to automate billing, send out payment reminders and keep track of all customer billing information in one place.
Creating an online store for your business can seem like a daunting task. You may need to start asking yourself questions such as:
Will I need to hire a developer?
What if I need to add products or services?
How do I market my online store?
Service-based businesses in particular are met with significant hurdles when setting up online stores.
Why? Because most website and shopping cart solutions aren’t built for them — they’re built for retail . This forces service providers to make their best attempt at adapting retail-focused solutions to their own needs.
Luckily, an increasing number of payment solution providers have begun to adapt their services to the needs of service based business in recent years. This allows businesses to productize their services, preventing the need to customize every single transaction. Needless to say, this is a major time saver.
When you’re running a small business, every penny counts towards boosting your bottom line. That’s why it’s so challenging — yet crucial — to sift out unnecessary costs and adjust accordingly. Yes, you need to pay for certain tools and resources to operate, but which are providing positive ROI and which are dragging you down?
Tedious as it may be, you should be conducting an extensive review of your expenses on a quarterly if not monthly basis. Go line item by line item and scrutinize each cost. If it’s providing your business positive ROI, then keep it. If it’s creating more cost than benefit, ditch it and look for a more cost effective option.
One major benefit of utilizing SaaS solutions (software as a service) is that they allow you to pay for only the services you need in the months that you need them, so that if your requirements change or you’re not seeing enough return, you can simply cancel and cut costs almost instantly.
For a list of ways small business can cut costs, check out this article .
Check out our newsletter
Monthly tips on running a business in your inbox.
Thanks for subscribing!
Dividends Diversify
Serious Financial Problems: Solutions For The Worst Money Issues
12 symptoms of and 5 solutions for serious financial problems.
Let’s talk solutions to your serious financial problems.
Let me explain…
In a recent article, I wrote about the causes of financial problems . And I followed that up with an article about bad financial decision making.
Those 2 articles were meant to help you be proactive with your money . The intent was to provide the knowledge to keep out of financial trouble before it starts.
Let me summarize the purpose of those prior 2 articles:
By understanding the causes of financial problems , you can avoid financial trouble in the first place.
And by avoiding bad financial decisions , you can side-step many other common financial problems too.
But sometimes we make personal finance mistakes . And get into financial difficulties anyway. Serious financial problems become the result despite our best efforts. Or, just because of careless behavior.
If that’s the case, then solutions for those serious financial problems are required.
Symptoms Of Serious Financial Problems
What is the first step to solving serious financial problems? The first step is knowing that there is a problem.
To help out, here are 12 symptoms of serious financial problems. As you read, make a note of how many of these symptoms pertain to you.
Have No Idea How Much Money Is In The Bank
Rarely check bank account balance. Having no idea how much money the account holds. Over-draft charges have been applied to the account because of insufficient funds.
Using Credit Cards For Basic Expenses
Use credit for expenses like groceries and gas for the car. Then, unable to pay off the credit card balances in full. Or meet minimum payment requirements when due.
Not Opening Bills And Credit Card Statements
Ignore bills when they come through e-mail. Or, stuff unopened envelopes containing bills and statements in a drawer.
Pay Bills Late
Pay bills only after they become past due and as a last resort. Late fees have been assessed by service providers.
Discontinuation Notices
The electricity, gas, and water companies have threatened to turn off service. In the worst case, service has been discontinued.
Collection Calls
Past due accounts have been turned over to collection agencies. Periodically dodge incoming collection calls.
Additional Debt
Not thinking seriously about adding more debt. Find yourself saying “just this one more time it will be okay”. Besides, I’m already in debt.”
Paying Off One Debt With Another
Looking for credit card balance transfer offers. And using them to pay off old credit card debts. Also, using a credit card to make the next mortgage, student loan, or car payment.
New Credit Denied
No longer able to get new credit applications approved. Earned a poor credit rating from the major credit reporting agencies.
Look For Alternative Sources Of Money
Borrow money from family or friends.
Not paying income taxes. Or, filing a tax return each year.
Arguments About Money
Have arguments about money issues with family or friends.
Do You Have Serious Financial Problems?
How many symptoms mean you have a serious financial problem? Well, there are no exact answers to that question.
But, I would say if you answered yes to more than 2 or 3 of the symptoms, then you have financial trouble. Or, you will have financial stress very soon.
Now we know a problem exists. Your financial goals should include solving the problem as fast as possible.
I’m going to tackle solutions in two different ways. First, depending on the problem, identify some general solutions. Then, no matter the problem, suggest an action plan.
General Solutions For Serious Financial Problems
Let’s break the problems into several categories. Neither the problems nor the solutions are intended to be mutually exclusive.
In other words, more than 1 problem or solution may apply to any person’s situation. However, I always think it’s best to break big financial problems down into smaller ones.
Solutions For Financial Problems Due to Life Issues
One or more sudden and unexpected issues crop up in life
- Large decrease in income from job loss or work interruption
- Health and medical issues
- An unexpected new child added to the family
- Big losses on investments gone bad
Solution – When confronted with 1 or more of these events adjust your lifestyle and reduce expenses. Consider moving to a lower cost of living location . This solution applies to most serious financial problems, but especially to these specific events.
Solutions For Financial Problems Due To Major Life Events
Major life events make financial changes a necessity
Solution – Downsize your home and move to a cheaper location . Housing costs are one of the biggest expenses in everyone’s budget.
Are you out on your own again or newly retired? Then moving to less expensive quarters can save a lot of money and balance your budget fast.
Just be sure to consider all the pros and cons before you move .
Solutions For Financial Problems Related To Young Adults
Emotional attachment, lack of objectivity, unrealistic expectations
- Adult children on economic life support from parents
- Moving out on your own for the first time as a young adult
Solution – Emotionally detach. If you have raised your kids responsibly, it’s time to cut the financial aid. At some point, your finances and a secure retirement must take priority.
Most importantly, as a young adult out on your own, set realistic expectations. You may not be able to provide the lifestyle your parents provided for you.
Solutions For Financial Problems Due To Personal Behaviors
Personal behaviors counter-productive to one’s finances
- Drug or alcohol abuse
- Excessive gambling
Solution – Seek help from appropriate and experienced professionals.
Solutions For Financial Problems Due To Lack Of Knowledge
Lack of training about money management
- Limited knowledge about personal finance
- Bad financial decision making
Solution – There are plenty of good books, websites, financial coaches, credit counselors, and accountants available. So, pick the right resource for your needs and start learning money management skills today.
Financial Problem Solving Process
So far, we have discussed some general solutions to serious financial problems. But, there’s more. We need a detailed action plan.
Financial problem solving reminds me of my days in the business world. It’s a 4-step process.
- Admit there is a problem, identify it and define it
- Develop a “big-picture”, broad-based solution to the problem(s)
- Create a step by step action plan to put the solution in place
- Take action and monitor the problem until it is solved
So, here we go with a week by week action plan to accomplish these 4 steps.
Immediate Steps To Solve Serious Financial Problems
Week 1 assess the situation.
It is time to make a complete assessment of your financial situation . So ask yourself, what is the current state of affairs?
We are trying to affect change. And the first step to making a change is to understand the current situation.
Do Your Accounting
So, I want you to document how much money you have. And, where that money is located.
If you have belongings you can reasonably sell for cash in the short-term include those too. Include retirement account savings. For example, it may be better to borrow from your employer-sponsored retirement plan than leave debts unpaid.
Next, do a detailed accounting of your debt. Put every debt owed on a piece of paper or computer spreadsheet. Include the monthly payment and the date it is due.
Yes. We are doing a little accounting work here. I know it’s painful because I used to be an accountant.
Keep It Simple
If you have a computer and are comfortable with spreadsheets use that. If not, a bound notebook is fine. You just need a place to gather and organize your basic financial information.
There are plenty of good personal finance apps available too. But, I’m guessing those who are in financial trouble don’t use them.
So, don’t waste time getting an app and trying to figure out how to use it. A 99 cent spiral-bound notebook is good enough.
That’s exactly what I used in my 20’s before personal computers and apps for handheld devices existed for the masses. It works. At this point, do not over-complicate your finances with technology.
Week 1 Goal
Finally, determine if any of the past due debts can be brought current with available cash. If so, make the payments.
Your first of many financial goals is to use available funds to get creditors off your back. And buy time to move through the action plan.
Next Steps To Solve Serious Financial Problems
Weeks 1-2: increase awareness of spending habits.
Next, I want you to see and feel where your money is going. To do so, for at least 2 weeks, spend only cash.
Be conscious of where your money goes. Save receipts and put them in a file on your desk.
Personal finance experts suggest that spending cash makes a person more aware of what they buy and how much they spend. So, you are more likely to spend less. And place more value on what you purchase.
At the end of each week, take those receipts and make a detailed list of every item you spent money on and how much. Use the same computer spreadsheet or notebook you started using at the beginning of the week.
Getting Serious About Solving Financial Problems
Week 3: create a spending plan & get serious about cutting expenses.
At this point, it doesn’t matter how much money you are making. If you have financial problems the quickest way out is by reducing expenses.
So, take a look at your expense tracking from the prior 2 weeks. Ask yourself what expenses you can reduce.
How To Reduce Expenses
Take a large expense and make it smaller. For example, find a nice, but low cost place to live .
Take a small expense and make it smaller. Such as, do you purchase coffee out every day? If yes, make it at home. Need it to go? Then buy a cheap commuter mug.
Interest rates are at all-time lows. So, refinance your mortgage if you have one.
Temporarily reduce your life insurance .
Eliminate unnecessary expenses. Memberships and subscription services that have added up over the years are a good place to start. Anything that is not a necessity like rent/mortgage, food, and transportation to/from work is fair game.
Can You Increase Income?
Next, look for ways to make extra income. Can you take on part-time work? Or, start a side hustle ?
Personal Cash Flow
What you are doing is looking for ways to increase your cash flow. That extra cash flow will go to pay off your debt.
Resource: Personal cash flow, how to track it and increase it
What you have started in weeks 1-3 is an ongoing process. Spend only cash. Collect your receipts.
Be aware of your expenses, track your spending, reduce costs where you can, and put together a personal cash flow statement.
Don’t worry about making a mistake. It doesn’t have to be perfect. Just get started. And get better as you go.
Make it a game. See how close you can track your expenses to the penny. See how little you can spend. And how much extra cash you can create to pay off debt.
Get on top of this ongoing activity. Then, the monthly bills and debt payments won’t seem so intimidating.
Debt Is The Result Of Serious Financial Problems
Week 4: create a plan to pay off your debts.
Now that you have an understanding of your personal cash flow (also known as a budget), it’s time to use it to pay off debts.
Paying Your Debts As They Come Due
Let’s pull together several pieces of information you have worked on thus far. First, the list of all your debts. Second, the monthly required payments on those debts. Finally, the personal cash flow statement you have been working on over the first 3 weeks.
Now, does your excess cash flow meet the needs of those debt payments? If yes, great. Then, continue working this process every day, week, and month to make those debt payments.
Contacting Your Creditors
If no, you have a couple of options. First, consider contacting your creditors . You are now armed with enough information to have a productive conversation. Your goal is to work out a payment plan with each creditor that fits with your cash flow.
Debt Consolidation
Another option is to consolidate all of your debt into 1 loan with 1 manageable monthly payment. According to Debt.Org , there are five main ways to consolidate debt:
- Arrange a debt management payment plan through a nonprofit credit counseling agency
- Transfer unpaid balances to a single credit card with a lower interest rate
- Take out a personal loan
- Use a home equity loan or a home equity line of credit (HELOC) to pay off your creditors
- Borrow from a retirement savings plan like a 401(k) or a Roth IRA
Week 4 Goal – A Manageable Debt Payoff Plan
By doing these steps, you have a plan to pay off your debts. No more discontinuation notices or collection calls to deal with. Plus, a huge reduction in financial stress.
The goal is to set up a debt payment plan where you can make the required payments every month.
Then, keep looking for ways to increase your personal cash flow. In the best circumstances, make extra payments on your debt to reduce it more quickly.
Other Options To Solve Serious Financial Problems
Hopefully, the solutions, action plan, and other resources presented here are enough to solve your financial problems. If not, there are other ideas to consider.
Workplace Employee Assistance Programs
Many employers offer confidential 3 rd party employee assistance programs. They are normally offered at no cost to the employee as part of the employer’s benefits program.
These programs employ professionals who can offer assistance with personal issues and money problems. Often these go together. At a minimum, a representative can guide in setting up and managing a budget.
Credit Counse l ing
Credit counseling is another option. Counselors also offer advice on budgeting, managing money, and other basics of finance.
They can assist people who are unsure of how to approach creditors about a payment plan. In brief, they assist people with the action steps outlined in this article.
Representatives from an employee assistance program or credit counseling agency are advisors. Unfortunately, there are no short cuts.
You will still have to pull together the financial information and do the work. But, if you need a little extra help and advice they are good options to consider.
Personal Bankruptcy
As a last resort, filing for bankruptcy may be an option. There are no clear cut rules on whether or not an individual should file for bankruptcy.
I would say that it should only be considered if none of the other solutions to solving financial problems will provide for a workable debt repayment plan.
On a positive note, bankruptcy eliminates debt and gives a person a fresh start. The downside is it will harm one’s credit and the ability to access money in the future.
It is also typical for employers to perform background and credit checks. So, filing for bankruptcy may hurt your future employability.
Other Issues And Opportunities When Solving Serious Financial Problems
If you get into serious financial trouble, use it as an opportunity to learn as much as possible about money management. Do your best to make finance fun.
When your finances turn in your favor, you have more money and more control over your life. That’s what makes the hard work and learning process pay off.
Finally, watch out for scams and pitfalls. Financial stress can make us vulnerable to scams.
Most scams offer to clean up your credit score for a fee. So, when reaching out for help, do your due diligence. And remember; only you can improve your credit score.
Solving Serious Financial Problems – Wrap Up
We have covered a lot. Make a personal finance goal today to solve your money problems! Here are a few key points to remember.
The first step to solve any problem is to admit you have one. So, go through the 12 symptoms and see how many apply to your situation. More than 2 or 3 and financial challenges are at your doorstep.
Next, identify your financial problems and the general solutions for it. This will give you an overview of the problem and the task at hand.
Then, work through the steps in the weekly action plan. The goal is to put all of the pieces in place so you can pay your bills when they come due.
If necessary, reach out to 3 rd party professionals for help with money management. Or, for help in contacting your creditors.
Finally, learn as much as you can about your personal finances . And, watch out for scammers that promise unrealistic solutions for a large fee.
Further Reading About Financial Challenges And Opportunities
- How to save money on all your online purchases
- Learn more about how to manage your money
Author Bio, Disclosure, & Disclaimer: Please join me (Tom) as I try to achieve my goals, find my next place to live, and make the most of my money. However, I am not a licensed investment adviser, financial counselor, real estate agent, or tax professional. Instead, I’m a 50-something-year-old, early retired CPA, finance professional, and business school teacher with 40+ years of DIY dividend investing experience. I’m here only to share my thoughts about essential topics for success. As a result, nothing published on this site should be considered individual investment, financial, tax, or real estate advice. This site’s only purpose is general information & entertainment. Thus, neither I nor Dividends Diversify can be held liable for losses suffered by any party because of the information published on this website. Finally, all written content is the property of Dividends Diversify LLC. Unauthorized publication elsewhere is strictly prohibited.
It’s Time: Start Solving Your Serious Financial Problems Now
4 thoughts on “serious financial problems: solutions for the worst money issues”.
Great advice! From people I know in financial trouble (and others I’ve heard of), the issue with getting out of it often involves a reluctance to admit that a problem exists and a solution needs to be found. Many times, people bury their head in the sand. Of course, there are also inspiring turnaround stories.
Cheers, Miguel
Hi Miguel. That’s a great point. For most of us (and I include myself), no matter if the problem is financial or otherwise admitting we have a problem is often times the biggest hurdle. Tom
Reading this was making me anxious, haha. This is a good step by step plan on how to get out of financial trouble though with actionable items. We are all in denial for certain things until we open our eyes and see what’s going on.
GYM, No need to be anxious. I’m pretty sure you have all your “financial ducks” in a row. Tom
Comments are closed.
GE's investors seek solutions to renewable energy, supply chain challenges
- GE expected to reiterate 2023 earnings outlook
- Renewables business remains a problem
- Aerospace grapples with labor, parts and raw materials shortages
- GE plans to spin off energy business in 2024
CHICAGO, March 8 (Reuters) - When General Electric Co's (GE.N) investors gather on Thursday, the focus will be on the company's loss-making renewable energy business as well as persistent supply-chain challenges at its aerospace unit.
A $100 billion reduction in debt since 2018, coupled with a successful spin-off of its healthcare business and strong demand at its aerospace business, have shored up Wall Street's confidence in the Boston-based industrial conglomerate, driving up its shares up by nearly 80% since end-September.
But renewable energy remains a problem.
The unit, part of the company's portfolio of energy businesses called GE Vernova, has failed to turn a profit in the past eight quarters due to a combination of weak demand, higher raw materials and labor costs and supply-chain pressures. It reported a loss of $2.2 billion last year.
Analysts have raised questions about whether GE may be forced to alter a plan to spin off GE Vernova into a separate company next year, including a possible delay or changing which assets are included.
Latest Updates
- Storage category Oil steadies as French strike and weaker dollar balance recession fears , article with image
- Renewable Fuels category Exclusive: Hydrogen firm Thyssenkrupp Nucera says IRA spurring U.S. interest , article with gallery Gallery
View 2 more stories
GE Chief Executive Larry Culp has acknowledged the renewables business requires "wiring and plumbing" before the spin-off.
"I want to kind of understand is there any chance at all that Vernova will not include GE wind," William Blair analyst Nicholas Heymann said.
GE is prioritizing the turnaround of its onshore wind business and has reduced the unit's global headcount by about 20% in a restructuring and resizing that is expected to produce savings this year.
Nonetheless, although tax credits for wind projects offered under the U.S. Inflation Reduction Act (IRA) have boosted demand in North America, the company doesn't expect a meaningful improvement in the onshore business in the first half of 2023.
GE also faces challenges in offshore wind since it was barred from making and selling its Haliade-X wind turbines in the U.S. after a jury found they infringed a patent owned by rival Siemens Gamesa Renewable Energy (GAM.HA) .
Bernstein analyst Brendan Luecke expects GE's renewables business to post another loss this year.
But overall, GE is expected to reiterate its 2023 adjusted earnings outlook of $1.60 to $2.00 per share on Thursday.
The aerospace business, which supplies engines to Airbus (AIR.PA) and Boeing (BA.N) , is grappling with shortages of labor, parts and raw materials.
The unit, GE's cash cow, had unfilled customer orders worth $135 billion at the end of 2022, up 8% from the prior year.
GE has deployed hundreds of employees to its aerospace suppliers' sites to ease the bottlenecks but there has been no material improvement in the situation.
"GE has made great progress, but risks remain," JPMorgan analysts said in a note.
Our Standards: The Thomson Reuters Trust Principles.
- Gallery INSIGHT India's oil deals with Russia dent decades-old dollar dominance , article with gallery March 8, 2023
- Video Refining category French pension strikes to continue Thursday, disrupting fuel supply and air travel , article with video March 8, 2023
- Gallery Renewable Fuels category Exclusive: Hydrogen firm Thyssenkrupp Nucera says IRA spurring U.S. interest , article with gallery 12:34 PM UTC
- Sustainable Markets category Factbox: Biden budget to target U.S. fossil fuel subsidies , article with image 1:16 AM UTC
BMW's core carmaking business hit its 2022 earnings target, the company said on Thursday, helped by strong pricing and consolidation of its China joint venture.
- Sustainable Markets category German heating can't be made 100% electric, suppliers say , article with image 12:13 PM UTC
- Finance category Americanas scandal won't affect Brazil banks much even in "extreme scenario" - cenbank , article with image 12:37 PM UTC
- Business category GE sees aviation revenue boost from jet engines, aftermarket demand , article with image 1:59 PM UTC . Updated undefined ago
- Environment category Parts of China sees record-breaking temperatures , article with image 9:44 AM UTC
- Today's Paper
- Markets Data
- Business Summit
BHP slams Labor job reforms as old solution to a new problem
BHP’s Minerals Australia president Geraldine Slattery has defended the company’s in-house labour hire division and launched another broadside at the Albanese government’s “same job, same pay” policy.
Disparity in employee pay at BHP mines is partly influenced by the creation of the “Operations Services” (OS) division over the past four years, which gives permanent employment and conditions to workers performing maintenance and production roles that were traditionally done by labour hire firms.
Geraldine Slattery speaking at the business summit on Tuesday. Michael Quelch
OS has been particularly controversial in the heavily unionised Queensland coalfields, because it sidesteps some of the most lucrative enterprise agreements in the Australian mining industry that cover the coking coal assets owned by BHP and Mitsubishi.
The division has grown to more than 3500 employees in recent years despite the Fair Work Commission quashing OS workplace agreements in 2020 because they did not satisfy the “better off overall test”.
Ms Slattery said OS “recognises you need a different way of working and a different service delivery model, if you like, for things like maintenance and truck drivers and so forth”.
The existence of OS is one of the reasons BHP opposes the Albanese government’s same job, same pay reforms.
“That feels very much like an old solution to a very different environment,” said Ms Slattery of the government’s policy.
She told The Australian Financial Review Business Summit : “Pegging all work to the same high water mark in terms of pay, it breaks that link between cost of labour and productivity and it also removes flexibility on both sides both for the employer and also the employee.
“People want to have choice in how they work and how they are rewarded, so we are quite concerned about it.”
Read more from The Australian Financial Review Business Summit
- Woolies, CBA CEOs say trading is ‘strong’ despite rate rise hits As the RBA raised rates again, the CEOs of CBA and Woolworths said spending is strong, and food inflation is persistent, pointing to challenges for the RBA.
- Chanticleer | Why big bank profits will help with what comes next Matt Comyn knows big bank profits provoke an emotional reaction. But he argues that today’s profits will be tomorrow’s economic buffers.
- Cormann slams political hostility to ‘holistic’ tax reform Former Coalition finance minister, now OECD boss, Mathias Cormann laments Australia’s lame tax ‘debates’, which he says are fundamentally about tinkering around the edges to fix bracket creep.
- Greens’ gas objections impede clean energy transition: PM Anthony Albanese says the rhetoric of the Greens and others who want a ban on gas “doesn’t stack up”.
- Albanese open to visiting China, but business cautious on Xi regime Anthony Albanese says he is happy to visit China this year as the country reopens after three years of lockdowns – “if there’s an invite”.
- Chanticleer | Dr Doom predicts ‘five wars’ might just ruin it all for Australia Nouriel Roubini says governments will need to fight five highly inflationary “wars” in the coming decades. This will lead to four key challenges for Australia.
- Investment returns will be weaker this decade: Costello Peter Costello says more rate rises and an unemployment rate above 4 per cent will be needed to tame inflation, as he warned of falling investment returns.
- ‘Very high rates’ needed to stop US consumers: Bank of America CEO The Federal Reserve will have to hold rates higher for longer as the US economy powers along, says Bank of America chief Brian Moynihan.
- Chanticleer | Comyn says this slowdown will be different as customer anxiety mounts The CBA boss says the gap between the anxiety customers feel as rates rise, and their lived experience, shows why banks must remain flexible as the economy slows.
- Business fears Australian recession is imminent About half the companies in The Australian Financial Review/Freshwater Strategy business survey expect a recession, and have called on the government to cut red tape and taxes.
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
- Business Summit Add tag
- BHP Group Add tag
- AFR Live Add tag
Latest In Mining
Fetching latest articles
Most Viewed In Business summit
IMAGES
VIDEO
COMMENTS
Problem 1: You need more money. Whether you've lost your job, met an unexpected expense, or are working on becoming more financially independent, a form of income is necessary. If you are a looking for additional work or maybe just a better-paying job, take some time to update your resume and cover letter.
Here are solutions to the four most pressing small-company financial problems. 1. To keep selling, pay employees and vendors first. Business leaders must triage their operating expenses --...
For companies that extend credit terms to customers, top ways to improve cash flow include establishing clear payment terms, invoicing effectively, offering discounts for early payment and making it easy for customers to pay you. Combined, these strategies will maximize liquidity. Not Using a Budget
5 Common Financial Problems that Small Businesses Face 1. Loss of Customers Customer retention is a perennial concern, and tracking retention and churn rates is a good way to measure the effectiveness of different tactics to minimize customer loss.
Is your business really struggling with financial problems and you need quick cash? Here are some of the best ways to find it. 1. Restructure Your Business Plan Once you have gotten the proper education on how to handle your company finances, it is time to make some changes to the business structure.
Burdensome debt is one of the most common causes of financial difficulties. When someone has more debt than they can handle, it can lead to missed payments, late fees, and damage to their credit ...
10 Financial Problems in Business Cause and Their Solutions 1. No Budget Planning The first and frequent financial problem of MSMEs is that entrepreneurs do not make careful budget planning. Please note, even though you are building a business on a small scale, budget planning is still needed.
Take the time to develop promotional paths for top employees, so they will benefit from company growth. 2. Changing Operations in Response to the Market Conditions The second most common challenge in 2022 has been supply chain disruption.
Your business problem statement should conclude with a solution to the problem that was previously described. The solution should describe how the current state can be improved. Solutions must not exceed than two sentences. Avoid including elaborate actions and steps in a problem statement.
Focus on solving the problem that's causing your money troubles, rather than dwelling on your stress. 2. Create a Budget - Spend Money in a Way That Helps Solve the Problem One of the best weapons for combating financial problems is a budget. A budget is a monthly spending plan for your money.
Handling cash flow problems requires short- and long-term financial adjustments (or a mix of both). Here, 11 members from Forbes Business Council provide methods for solving cash flow issues. From ...
What is problem solving in business? Problem solving in business relates to establishing processes that mitigate or remove obstacles currently preventing you from reaching strategic goals. These are typically complex issues that create a gap between actual results and your desired outcome.
CLO managers have entered the pandemic crisis with portfolios over-weighted with loans that are most likely to be downgraded to the undesired CCC category. Although single-B rated loans comprise ...
Solution. As far as we are concerned, this problem can be solved in two ways: Providing customers with incentives that will make them pay faster. For example, giving them two percent (2%) discount in exchange for payments that are made in ten days earlier can actually motivate them to pay faster. Invoice factoring can also be used to finance ...
Understanding financial stress Effects of financial stress on your health Tip 1: Talk to someone Tip 2: Take inventory of your finances Tip 3: Make a plan—and stick to it Tip 4: Create a monthly budget Tip 5: Manage your overall stress Understanding financial stress If you're worried about money, you're not alone.
2. Bootstrapping There are two opposing schools of thought when it comes to funding a business - fund everything out of pocket (bootstrapping) or get investors and lenders to fund the business for you. While bootstrapping has its advantages, it is one of the fastest ways to find your company backed against the wall financially.
Identifying common business problems When determining what issues your company is currently facing, it helps to break your business challenges into two sections: current business problems that you can quickly fix, and deeper business problems that require more intensive repair. Some examples of current, surface-level problems are: 1.
When setting up a merchant account, businesses have two options. The first is to get a dedicated account provisioned solely for your business. This can be done through payment commerce platforms like PaySimple and requires going through an application process to ensure your business is in good credit standing.
So far, we have discussed some general solutions to serious financial problems. But, there's more. We need a detailed action plan. Financial problem solving reminds me of my days in the business world. It's a 4-step process. Admit there is a problem, identify it and define it; Develop a "big-picture", broad-based solution to the problem(s)
GE plans to spin off energy business in 2024. CHICAGO, March 8 (Reuters) - When General Electric Co's (GE.N) investors gather on Thursday, the focus will be on the company's loss-making renewable ...
BHP slams Labor job reforms as old solution to a new problem. Peter Ker Resources reporter. Mar 7, 2023 - 4.38pm. BHP's Minerals Australia president Geraldine Slattery has defended the company ...