Financial setbacks are an inevitable part of running a small business. Whether it’s an unexpected expense, a slow sales period, losing a major client, or broader economic challenges, these difficulties can feel overwhelming when you’re in the thick of them.
The important thing to remember is that a setback doesn’t define your business’s future. Many successful businesses have faced similar challenges and emerged stronger on the other side. What matters most is how you respond and the steps you take to rebuild your financial stability.
How to analyse where you stand financially
Before you can move forward, you need a clear picture of where things stand right now. This means taking an honest look at your finances without sugar-coating the reality.
Start by reviewing your cash flow, which is how much money is coming in versus going out. Identify your essential expenses: rent, utilities, payroll, or inventory. Once you have a clear vision, separate them from discretionary spending. Look at your outstanding debts, payment terms, and any upcoming financial obligations so nothing comes out of the blue.
It’s also worth examining what led to the setback in the first place. Was it something within your control, like overspending or poor financial planning? Or was it an external factor like market changes or unexpected circumstances? This reflection isn’t about assigning blame; it’s about learning and preventing similar issues in the future.
How to recover from the setback
Once you understand your financial position, it’s time to develop a practical recovery plan. This plan should focus on stabilising your business in the short-term while setting you up for sustainable growth in the long-term.
- Plan your costs: Start by prioritising your expenses. Identify which costs are absolutely necessary to keep your business running and which can be reduced or eliminated temporarily. This might mean renegotiating contracts, finding more affordable suppliers, or pausing non-essential services until your finances improve.
- Make cash flow a priority: Look for immediate ways to increase cash flow. This could involve offering promotions to boost sales, following up on outstanding invoices, or exploring short-term opportunities that align with your business model. Some businesses find success by pivoting slightly to meet current market demands or by tapping into new customer segments they hadn’t previously considered.
- Look to the future: Setting realistic financial goals gives you something concrete to work towards. These might include rebuilding your cash reserves to a certain level, paying down specific debts, or achieving a target monthly revenue. Breaking larger goals into smaller milestones makes the recovery process feel more manageable and gives you regular wins to celebrate along the way.
4 steps to cut costs strategically during recovery
Reducing expenses is often necessary during recovery, but it’s important to do so strategically. Not all cost-cutting measures are created equal, some can actually harm your business in the long run. Here are some ways to do this strategically:
- Focus on areas where you can reduce spending without compromising quality or customer experience.
- Review your subscriptions and recurring expenses to identify services you’re paying for but not fully utilising.
- Negotiate with vendors and suppliers. Many are willing to work with you on payment terms or pricing, especially if you’ve been a reliable customer.
- Consider whether some of your fixed costs could become variable, giving you more flexibility as your revenue fluctuates.
One significant expense for many small businesses is workspace. Traditional office leases often lock you into long-term commitments with high overheads, even when your business needs change. Flexible workspace solutions can dramatically reduce your fixed costs while still providing a professional environment to work from. Considering a coworking space is a strategic way to keep costs down, but still have a professional address and location.
How to rebuild after a financial setback
As your business stabilises, focus on rebuilding your financial reserves. It’s best to have a cash buffer that protects you from future setbacks. This will give you breathing room to make strategic decisions rather than reactive ones.
You can do this by starting to set aside a small percentage of your revenue regularly, even if it’s modest at first. Consistency matters more than the amount in the early stages because as your financial situation improves, you’ll be able to gradually increase what you’re saving until you’ve built up reserves that could cover three to six months of essential expenses.
This buffer becomes your safety net, allowing you to weather future challenges without the same level of stress or disruption. It also positions your business to take advantage of opportunities when they arise, whether that’s investing in new equipment, hiring additional help, or expanding your offerings.
The mindset to have while rebuilding
Financial recovery takes time, and there will likely be moments when progress feels slow or uncertain. Maintaining your mental and emotional resilience during this period is just as important as the practical financial steps you’re taking. Here are some ways to improve your resilience:
- Connect with other business owners who understand the challenges you’re facing. Sharing experiences and strategies with peers can provide both practical insights and emotional support. Many discover they’re not alone in their struggles, which can be reassuring during difficult times.
- Keep your focus on what you can control. You can’t always predict or prevent setbacks, but you can control how you respond to them.
- Celebrate small victories along the way, each positive step forward is progress worth acknowledging.
How a coworking space may just be what you need
Your workspace plays a bigger role in financial recovery than you might think. The right environment can boost productivity, reduce stress, and provide valuable networking opportunities that lead to new business. But the wrong one can cause heaps of headaches.
Luckily, flexible coworking spaces exist and offer a solution that adapts to your changing needs.
- Instead of being locked into expensive long-term leases, you can scale your workspace up or down as your business requires. This flexibility is particularly valuable during recovery when financial predictability matters most.
- Beyond the cost savings, coworking spaces provide access to a community of other business owners and professionals. These connections can lead to collaborations, referrals, and shared knowledge that accelerates your recovery. Being surrounded by others who are building and growing their businesses creates an environment of motivation and possibility.
- Professional workspaces also help maintain the boundary between work and personal life, which is crucial for staying focused and avoiding burnout during challenging periods.
Having a dedicated place to work keeps you in a productive mindset and signals to clients and customers that you’re still very much in business.
Reduce your overheads with us
Financial setbacks are challenging, but they’re also temporary. With a clear plan, strategic cost management, and the right support system, your business can recover and build a more stable foundation for the future.
At Haven Workspaces, our flexible workspace solutions are designed to support businesses at every stage, offering the professional environment you need without the burden of long-term commitments. Whether you need a desk for a few days a week or a dedicated space as you rebuild, we’ve got options that fit your budget and your goals. Plus, you’ll join a supportive community of business owners who understand the journey you’re on.
Get in touch today to learn more about how Haven Workspaces can help your business thrive.