Running your business at loss..??.. take a quick look in to the following quinine before you quit.

Loss is a quite tough word indeed. Although Profit & loss is a part of every life cycle whether it is living or non living.. but once loss lives, it looms larger than what profit looks. Accordingly, a provocative panic develops up among people that leeds them to further loose their feet & ultimately rests in taking wrong decisions. Henceforth, if an individual steps in to loss in either life, it is advisable not to loosing up to such loss, rather it would be apprehensive to find out the reasons behind such loss. As such I felt that I could put forward few optimistic thoughts on this behalf. As we all know, a loss incurs when respective expenses exceeds over income. However, if financial statement of a concern steps in to negative, following consideration should be taken in to account before taking any tough decision.

Firstly, calculate the net cash flow for that period in concern by adding back the non cash expenses & outstanding like depreciation, outstanding expenses etc. Accordingly,if the entire loosing amount is wipes out, no worry remains & one can really rely in running his/her venture along with the recession. However, if the substantial amount still shows in severity, we need to further place our concern in cost of operation. Now it is essential to fix up the extent of variable cost(including cost of processing) still prevails in total cost & accordingly, we need to add back again such amount to recover the loss. Consequently, if the above deviation can derive any profit or recover the loss, we may carry on our venture as long as the contribution is capable enough to cope up the fixed charges depending upon the sustainable liquidity strength.

Secondly, if the loss lives in devaluation of finished products or due to lack of working capital or raw materials i.e, due to recessionary aspect, it will be apprehensive to temporary slow down the operation or look for other financing options or apply for government grant. Also you can ask your creditors to allow some relaxations in payment schedule etc.

Finally, one need to exercise all the probable options to cope up the crisis. Filing bankruptcy is the least option remains & as such it also reflects adversely in credit report.