One our favorite mantra’s at Ali Safavi Real Estate is, “earning money is not child’s play.” It’s a simple phrase, but an important concept to remember. It takes a lot of hard work, dedication and a touch of luck to make it big in today’s world. People with a significantly inferior academic performance but an excellent ability to present themselves and manipulate others see them make much better careers for themselves as compared to those individuals which had scholarships and distinctions in their student days. This signifies the importance of being street smart in addition to knowing about your trade-in getting you the success you desire from life.
Ultimately, life can reward you with an unwarranted situation which may prove to be the ultimate test of your mettle to handle pressure and turn things back in your favor. One can end up losing money as quickly as they wound up earning it in the first place, going from hero to zero in the blink of an eye.
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Here are 5 Ali Safavi Real Estate tips for digging yourself out of a financial hole.
My personal and business savings, as well as investments in stocks and bonds, also helped me in bouncing back from my loss. Every business or company should have such measures in place, especially in today’s turbulent world where the frailties of the economic system can be exposed in as early as a fortnight.
The global recession which started in late 2007 took its toll on many global powers. In particular, the US housing sector is accredited with starting off this negative cycle mainly because banks did not have the proper contingency plan to recover the credit amount which it had lent to individuals who began defaulting on their loans. As such, the importance of having some sort of “Plan B” is important for a business or company to save itself from a particularly “back to the wall” situation.
Related: 8 Steps To Get Out Of Debt
Dive into your Personal Savings
A viable option to consider when starved for money is to dive into your own personal savings which you been saving for a rainy day, just like I did. This is the surest shot way of nursing your struggling business back to health, especially if you require a small amount to save your business. What makes this mode of financing better is that you have don’t have to repay the principal amount and neither do you have to pay any interest as it is your money which you can spend according to the flexibility you offer yourself. Many people sign on for more loans to pay off previous loans which is not advisable in such conditions. Thus, for any businessman, it is important to save a portion of your income to replenish your business when it is dealt a severe blow at any point of time.
Secure a Loan
To be honest, my personal savings were not that many which did force me to take a loan to partially re-fund my business. If you indeed do require a considerable sum of money to revive your business, a bank is your best bet to get such funding as quickly as possible. It is normal for businesses to take regular loans from banks in order to fund their working capital requirements for performing their core business actions. Banks are willing to grant loans to such businesses given that the provided documentation detailing the operations of the business are strong to guarantee a repayment of the bank’s loan in a timely manner.
However, in situations where companies approach banks for the purpose of refinancing their businesses, banks are not too willing to entertain their requests for obvious reasons. Granting loans to businesses so that they can pay off their previous loans is termed as a risky business for banks. The banks know that the sum will not be used to add value to the business and rather would only serve as a means for the company to pay their dues. Hence, this will greatly increase the risk of non-payment of loans.
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Sell your Assets
Another alternative I looked at in order to get the liquidity back to my business was by selling off some of my least prized assets. When I realized my business needed to undergo drastic changes in order to remain profitable, I first look to cut my losses from within. A decreasing amount of business lead to an excess amount of unutilized resources in the form of raw material, machinery, labor which I could forego. It was only logical to sell or let go of such assets which were remaining idle and are not playing a part in the production process of my business.
Instead of letting such assets be a burden on my production cost as well as wage bill, it was in the best interests of my company to let them go by selling them, even for a loss. This freed up a good chunk of money which I then repurposed for being utilized in the repayment of the dues the company had and also used them as funding to make more purposeful purchases in light of my company’s current situation.
The road to recovery is a long and treacherous path which needs to be followed without the slightest of deviations as I witnessed firsthand. You should be patient while faced with a particularly worrying situation as it clouds your ability to think freely and positively. Every decision you take should be more result oriented from now on and should positively impact all the stakeholders of your business in order to prevent further damage to your company.