S-Corp to an LLC

One of the biggest mistakes that everyone – business leaders and ordinary people alike make is taking every crisis too personally. We put ourselves at the center of events since we are part of that crisis. These thoughts evoke a whole range of emotions, from anger and denial to a desperate desire to do something to change everything. But will emotions help? We share advice on overcoming the crisis in your business.

Actions Business’ Owners Should Take To Tackle Crisis

More Serious The Crisis, The Calmer You Should Be

By giving in to emotions, you will make hasty, impulsive decisions, and your team members and clients will panic. Resentment, withdrawal from reality, and impulsive actions rarelyad to a favorable outcome. However, most people do not realize that this is how they react. They can be sincerely convinced that none of their actions could lead to such problems. And they take a defensive position, trying to explain to everyone that it is not their fault.

Some are doubly diligent in applying a business model that worked in the past, without finding out if it still works. Others begin to destroy everything: lay off employees, change the leadership team, close new projects, refuse services from suppliers, move to a new location, and destroy the business just because times are tough or something goes wrong. The situation has changed and, in their opinion, they also need to change. Such an instinctive urge may be wrong.

Self-control helps to transcend the self and carefully analyze the state of affairs in order to understand the scale and scope of the problem before doing anything.

Don’t Become Defensive

Meet with customers and employees. How does the current situation affect them? How vulnerable are they and how can you help each other cope with this? Clients should learn about your problems from you, not from the media, and vice versa.

Sharing problems with customers when your sales depend on their confidence in you may seem counterintuitive at first. In fact, this is not the case. By building trusting and transparent relationships with clients, you are investing in each other’s success.

These people are your best source for identifying any underlying issues in the company and the market. If the crisis is due to factors beyond your control, customers will be the first to feel it. After all, they are always at the forefront, so they are more likely to notice shifts in the market or in a competitive environment before you.

Stick To Current Structure

Whatever the crisis may be, you should not radically change the structure of the business. If your company is registered as a limited liability company (LLC) and you planned a transition to S-Corp, now is not the right time.

During the time of crisis, it is not sure how much profit the business is going to make. And being an S-Corp requires abiding by IRS rules, like giving the members a reasonable salary which if not fulfilled makes the business subjected to legal actions.

At the time of crisis, there is no point to compare an S-Corp to an LLC, just stick to your current structure. As this transition requires time that should be done only when you are making a good profit. The flexibility of being an LLC is what you need during such a time.

Find Out What Needs To Be Fixed

In case of any failure, first determine to what extent it is caused by internal reasons, and to what extent – by the market situation. The situation should then be corrected, but decisively. If on the eve of the market downturn you had the right strategy and the right vision of where the market is heading, you should not think that now this is not true. Many companies often make the big mistake of equating external crises with internal problems.

Maintain Interaction

Explain the nature of the problems and what you intend to do to fix them to all stakeholders. Be honest about the tough measures you need to take. Admit your mistakes openly. Try to instill in people the belief that you will stand up and leave the crisis behind. Then, paint a picture of the company’s future after it successfully overcomes the difficulties.

Final Words

Calmness, keeping the head straight, and making the right decisions is what a business requires at a time of crisis. Don’t panic and have faith in yourself and involve all stakeholders, without their support you won’t be able to overcome any challenge.