How to Succeed Financially When Your Family Business Is in the Red
Has your family business been negatively affected by the pandemic? Are you in the red?
If so, you’re not alone.
According to a June 2020 survey by Small Business for America’s Future, nearly 25% of small businesses in the country are considering closing their operations permanently due to COVID-19 and 12% are facing potential bankruptcy.
While the numbers are staggering, there’s still hope.
ActionCOACH’s Mark and Rick Phelps share 4 actionable steps that you can take to improve your business’s financial situation in 2020 and beyond.
So before you decide to close up shop, read on.
1. Find the Right Mindset (and Friend)
It’s easy to let your current situation get you down.
Your world has been turned upside down by an unprecedented event. The effects can be debilitating, and they can be compounded by factors such as family financial obligations.
Perhaps you’re the sole provider in your household. Your family’s health care, mortgage or college savings may ride on your success. That’s a lot of pressure.
But if you have the right mindset, you can move past it.
“It really starts in your mind. If you’re focused on all the overwhelm; if you’re focused on all the things going wrong, it can take over. And then, that’s all you see,” said Mark Phelps.
With this state of mind, you might start setting short-term goals.
“You might think, ‘I just need to get through this month.’ Those short-term goals might get you through the month but then you’re right back to the same spot that you were before.”
The biggest failure and challenge of business owners, especially small business owners, is burnout, which is mindset related.
Practicing mental toughness and creating daily habits will empower you to stay focused.
“You want your daily focus to be, ‘how can I make it through?’ How do you make sure that you’re taking ownership, accountability, and responsibility, and not slipping into blame, excuses, and denial? At ActionCOACH, we’ve got models like the Point of Power that can help you stay focused and in control.”
Staying focused with a positive mindset will allow you to plan a path out of your situation.
“You have to see the light at the end of the tunnel. And that light is constructed in your mind. You have to believe that it’s possible, practical, and doable. And then, do whatever it takes to put a path out in place.”
To help you identify the path out, find a trusted friend or mentor.
“Make sure that you’ve got a strong somebody around you to help you get through hard times. Someone who you can talk to. Someone who you can open up to about your current situation,” said Mark.
2. Ask for Help
Once you are in a healthy state of mind, get help.
If you’re a sole provider or the key provider, there are many free resources available to you, including the government’s Small Business Administration (SBA).
Additionally, there are various types of coaching and mentorship programs available to provide guidance. Many of these programs – including ActionCOACH’s services – start out free.
“Get your bearings and understand where you are at. Identify where the light is at the end of the tunnel. That’s where you need to head. That’s where it all starts,” said Mark.
3. Plot a Path Out
Once you have a sense of direction, plot a path out.
“There are a lot of financial opportunities right now for small businesses, including Small Business Administration (SBA) loans. Make sure to learn about them and educate yourself on what’s available to you. Then, take advantage of them,” said Rick Phelps.
Many of the loans will be forgiven and some SBA loans have no payments for 12 months.
Once you take advantage of the programs available to you, decide that this is the last time that this will happen. Put a plan in place that you can believe in.
“Think, ‘if I do x, y and z, I can achieve the green or the black. I can get out of my current situation.’ As long as that belief is there, as long as you’re willing to do whatever it takes, and put a ton of activity into it, then that’s your path forward,” said Rick.
And when you move past your current circumstance, take more action.
“When you’re out, build a safety net. Make sure your profit situation is controlled and not just focused on a lot of effort,” said Mark.
And when your business is profitable, store cash. This way, when a recession does hit, you’re prepared.
“The economy is a lot like the seasons. We’re entering winter, a recession, and we don’t know how long it is going to last. Hopefully it’s a short winter, and then we’ll be back out in spring when there’s lots of opportunities. And then, hopefully the summer will last for many years,” said Rick.
During the good times, make sure you build your business in a way that allows you to store cash.
“Take advantage of the impetus today to make changes in your life and in your business, so that you’re not caught short next time,” said Rick.
4. Live in the Present
As hard as it might seem, try to enjoy the present moment.
“We’re living in the right now. We’re not living in the past. We’re not living in the future. So love the people you are with. Love your family. That’s what is important. That’s what is valuable right now,” said Rick.
If your family business is in the red, separate your situation from who you are as a person. And separate it from your family.
“It’s important to identify that the past got you to your present situation, but it doesn’t define who you are as a person,” said Rick.
Instead, try to learn from what happened in the past and plan for the future.
“Do the one thing that you need to do right now to get yourself moving in the direction of where you want to be. That’s all you need to do,” said Rick.
Keeping a family business alive is keeping your spirit alive, your belief system alive, and your values in front of you. Take advantage of free resources and government loans available to you. Reach out to a trusted friend. Put a path out of your situation in place, and don’t be afraid to ask a coach or mentor for help.
“Put the effort in in the short term so that you can work towards the plan to get into the black in the long term,” said Mark.
Overwhelmed because your family business is in the red?