Over 65 per cent of the small and medium enterprises (SMEs) that open shop collapse within the first year, according to available data. This greatly affects the economy and individuals through loss of taxes and high unemployment rate, especially among the youth, among others.

The reasons for the high rate of business failure are very many, including competition and lack of skills.

However, there are those that continue operating, but are barely making any money; in short they are struggling to stay afloat.

When sales reduce and the profit margin becomes narrow, business operators always start using personal savings (sole proprietors) to cover operational costs. If this becomes persistent, that only means that drastic measures are required to address the situation and save the business.

Do you then as an entrepreneur down-size and send most of your employees packing? That what most business owners think of to cost cuts. However, this could be ill-advised and could worsen the situation, accelerating the business’s downward trend "because you are minimising its productivity by letting experienced skills walk away.

Therefore, the first thing a business owner should do is find out the root cause of the problem to find remedy and return to profitability.

Part of the solution could include letting go of redundant staff. However, it is essential to think long-term and devise strategies that will help plug the loopholes that were responsible for the poor performance to prop up productivity and sales.

Consult business experts to help you understand the problem, and identify possible interventions to improve operations and hence returns.

Business experts provide new and reliable advice on how to revive the business because they have got information and experience as to why businesses fail here you will have to give all the information concerning your business.

Also, as it could take long for a struggling business to obtain a bank loan, one could always turn to friends and relatives for short-term funds. Makes sure you use this money for the intended purpose and ensure proper record keeping to monitor performance.

You should also continuously assess the risks and other challenges so that you don’t fall into the same ‘trap’ again.

Forming partnerships with companies that are in the same line of business as you, or at the level of operation is another option a struggling enterprise can utilise to solve the challenge. A partnership helps bring in more money and skills that will improve management and output, as well as drive product sales.

Remember that though you work towards a common goal, it does not mean that the firms in the partnership will lose their individuality.

Alliances always support companies, ensuring they reap the rewards of team effort. In fact, the gains from forming strategic joint ventures are enormous.

Partnerships are key for firms to pool resources and consolidate their positions so that they can be able to expand into new markets, besides strengthening their balance sheet.

Eliminating some of the unnecessary expenditures or surcharges can also enable businesses to reduce costs. These can include loan late payment fines or bank charges, and penalties by the tax body. To avoid penalties, pay your bills on time, and minimise bank transactions to accumulating transaction fees.

Apart from enabling your business to cut costs, this will also improve your credit rating, which is important in case you need a loan in the future.

Devote more time to the business and ensure that you build proper business and financial management systems. This will, besides improving the firm’s productivity through refining operations and close monitoring of the venture and reallocation of resources to key areas, ensure that issues like quality and boosting sales are handling since you are directly supervising or giving them more attention.

Review the current business activities to see areas that where you could save some money and reinvest it into the enterprise. This especially if there are some sections of the business or goods that are being run using money from others or those that don’t sale.

Also, many businesses renegotiate old agreements with service providers with a view of getting better deals. Besides, firms like Internet or phone service providers are constantly coming out with better deals, which ‘smart’ businesses can take advantage of to save and cut costs.

Renegotiating old deals with service providers and suppliers gives you a chance to land some discount on your current plan.

Always the best way to rescue a struggling business is to using money for activities that are not related to the business and adopt prudent money management habits.

The writer is an accountant based in Kigali.

Email: vbahizi@yahoo.com