Crisis Management in the SME Market

One of the most challenging questions for any owner/manager in a small company is ‘how to deal with a financial crisis?’ e.g. the cash/overdraft is about to run dry/hit the limit and creditors are banging the door down. It would be pretty unlikely that the business plan (if there is one) identified the likely crisis and more importantly a strategy to deal with such a scenario.

It is not surprising that entrepreneurs always see the glass as being half full and therefore planning for a crisis is not be on the agenda. However, in reality things can always go wrong and often through no fault of the management/business owners e.g. a bad debt can easily wipe out your profits and put a business in a vulnerable position.

The key factor in a distressed situation where you are facing a cash crisis is to stay in control. This is of course easier said than done, as when the pressure mounts it is easy to end up ‘fire fighting’ and often the help that you presumed would be there simply melts away.

Sometimes ‘shutting up shop’ seems likely the only answer, but rarely is there a situation where a more positive outcome cannot be achieved by simply reviewing all the options available. In the last 10 years specialist firms have emerged to specifically help SME owner/managers in these circumstances. The solutions available will often involve putting workable recovery plans in place and introducing new investment into the business to restore financial stability.