Unexpected events turn out be extremely stressful. Even if you have a clear fundraising procedure in place, in some situations you might find yourself in a place where you are temporarily short of cash. These circumstances might happen because of some unforeseen circumstances.
Here is all about you should know to deal with financial crisis in business.
Everybody on board – You need to reach out all to the past as well as present donors, suppliers, and clients. This might be done through all the mediums possible which include emails, and telephonic calls. You need to describe your situation to others and ask for their help. Even all your board members can do the same.
Increase the Income – Increase the prices of all your goods and services. Even the backroom services of your company can be leased out to other organizations which might include office space, human resources and all other business related issues like consulting and accounting.
Learn more about discretionary funds – There might some instances where the senior officials could have made grants without going through the full legal process. This can drastically reduce your funds. You need to contact all your partners and verify if such an incident has taken place or not.
Enquire regarding emergency loans and grant- Contact all your local community institutions and get to know if such funds exist in your locality. Getting such loan could be very helpful at the time of emergency.
Some of the advantages of having an emergency reserve of cash are as follows –
Reduced Stress Levels- It’s a well-known fact that whenever there is an emergency, it creates a lot of problems in your financial well-being and causes stress. If you are living without any contingency plan and you are hoping to get by without being caught in a crisis then you are in for trouble. The trick is to always be prepared with an emergency fund and this gives you a lot of confidence to tackle any of life’s unexpected situations without having the fearing of being bankrupt.
Controlled Spending – As there is a saying “out of sight, out of mind”, similarly emergency funds can be stored in locked and hidden closets so that they are not spent. If you keep some funds away from your reach, it will result in saving and not being spent uselessly no matter how much you’d like to. The best solution will be to store in a separate account which will help you to know how much you have saved and how much more you need to save.
Prevent taking bad financial decisions – Though there are lots of other ways you can gain quick money but you must refrain from taking any kind of bad decisions like borrowing and taking loans. Interest, fees, and penalties will hamper your financial security even more.
How can you allocate money to emergency funds?
Any sort of investment which you cannot access easily through any source such as debit card, check or by cash on hand directly goes into the long time storage emergency fund. Another strategy to raise emergency funds could be investing all your long term funds into high-quality bonds which might yield great profits later. By using these techniques you can achieve a much better rate of return and that too with minimal amounts of risk. These bonds can be liquidated easily into cash in a very few days if you encounter any sort of large emergency. You can also keep your smaller funds in the form of short term emergency fund at any local bank or other financial institution. Though the interest rates are not high there but you can easily and immediately access your money without any hassle.
The Final Verdict
An emergency fund can be the real difference between your financial failure and your financial success. Its helps you to develop a discipline to save more money and at the same time tech you how an emergency fund will help you prepare for any sort of unexpected setbacks which you might experience in life. This might also drastically reduce your dependence on borrowed money which is taken at very high interest rates.
You also need to carefully examine all your expenses and then use that information for develop an effective emergency fund aim. You need to elaborately decide how much money you can save each and every month. This will help you identify all the unnecessary expenses and money wastages. So, you definitely need to make a plan to build up your emergency fund and also dictate how you want to store it. Thus, you should use your emergency funds very wisely.