Guide to Save Failing Business of Your Clients

Recently updated on March 8th, 2024 at 05:28 am

Whether it’s poor economic conditions, supply chain issues, or a few unfortunate decisions, sometimes good businesses—and great business people—hit a rough spot. As an accountant, instead of merely looking on as revenues drop and expenses increase, there’s a lot you can do to help save your client’s failing business. Read on to learn how you can use accounting advisory services to make a difference and the kinds of tools you can use to make it easier.

Identify and Analyze Revenue Trends

Using reports to analyze how revenue has fluctuated over time can help you pinpoint trends in your client’s income stream. For example, a straightforward report of revenue over a specific time period can help you identify issues such as:

Revenue Decreasing Due to a Specific World Event

This could happen because of something like an acute economic downturn. In that case, you can refer to a similar event and stats regarding how and when the situation rebounded—and encourage them to be patient instead of prematurely throwing in the towel.

Revenue Dropping in Connection With a Specific Marketing Initiative

Revenue dropping at the same time your client rolls out a particular marketing initiative is common, especially if the company’s sales funnel relies on a steady stream of customer outreach. When a company’s marketing budget is limited, it may have to put a lot of eggs in one basket, devoting significant funds to that campaign. If it doesn’t pan out, numbers will suffer.

By correlating a revenue drop with the time they launched a marketing initiative, you can identify the problem and suggest ways they can address it.

Discover Ways to Reduce Overhead

Reducing overhead is a powerful way to help a struggling company, especially because “success” is a subjective assessment based on income related to expenditures—at least in the short term. While your client may have a high-level view of overhead and know “it’s just too high,” you can track it using accounting business intelligence software to see:

• Which elements of overhead cost the most.
• How cutting certain expenses would impact your client’s balance sheet.
• What the effect would be of gradual adjustments over time.

Often, a company that’s failing because of overhead has a far brighter future than it may seem. As their accountant, you just have to show them the path to get there. With the right accounting data analytics software, this is more straightforward.

Analyzing Profit/Loss Ratios

Busy business owners often don’t have the time to track their profit and loss ratios over time. But with an accounting dashboard, you can surface their P/L and analyze it over time. In this way, you can discover when their P/L dropped and what caused the problem. Some common culprits include:

• Supply chain issues. Solution: Find new suppliers or adjust the products being made—even if it means scaling back the company’s offerings.
• High payroll costs. Solution: Run a leaner operation, which may necessitate temporary lay-offs. While this can be unpleasant, it’s worth it to save the company. Using data from an accounting dashboard, you could also advise them to adjust their benefits packages if these are heavily impacting their P/L ratios.
• High utility costs. Solution: While the cost of utilities may not be enough to bring their P/L figure up by double-digits, there’s often room to make energy and other utility usage more efficient—and every percentage point counts.

Using financial performance analytics software, you can automate the reporting of revenue, overhead, and profit/loss ratios and then leverage those insights to save a failing company. With PathQuest BI, surfacing these and other metrics is easy. Learn more by connecting with PathQuest today.