i n f o @ l o m a s v f d . c o m | Accountants Based in Tunbridge Wells | 0 8 0 0 4 5 8 0 3 8 9 | © 2008
Top Tips for Businesses in a Downturn
1. CASHFLOW
How many times have you heard cash is king-never more true than today. The trick of avoiding bad debts is to not engage with a customer who may turn bad. Run credit checks before you engage(eg creditsafe). Are you getting a bad feeling-then ask for 50% upfront. Keep tight on your debtors regularly. Keep in touch. Listen to those cues on the phone. Are your calls being ignored. Chase regularly and politely. Send a solicitors letter for a few pounds(see me) if things are getting sticky. Charge interest on overdue invoices put these terms on your T & C’s. If you carry stock try to carry less, money tied up in stock could be in your bank .Managing working capital is VITAL.
2. MANAGEMENT REPORTING
Does your software enable you to see how you are doing on a weekly even daily basis. How are your sales this period compared to last year? What are your margins like. Are they holding up compared to last year. How about costs-what are these as a % of sales. How does this % compare to last year.
3. CUSTOMERS
Start with your customer and work backwards. What do they want. Talk to them discover what they think about your offering what they are likely to want in the future. Keep them happy. Your business should be geared to them not the other way round. This is not just about products & services they might want .In these times of difficult credit it is devising solutions that make it easier for them to buy. Buy now pay later. Interest free credit etc but see 1.
4. GET YOUR STAFF ON SIDE
Your staff will be nervous. Keep a dialogue open with them –tell them what the order book is like. If anything is going to happen it won’t be too much of a shock. If work is slack ask them for ideas eg take unpaid holiday, volunteers for a sabbatical, staff rotation for a shorter working week. Improve efficiencies and processes while things are quiet. How about some tidying up or even a risk register/employee contracts, health and safety issues?
5. KEEP AN EYE ON THE FUTURE
What is down the track, what are the future trends in your business and are you correctly positioned?
Are your stock levels too high if market trends change. Can you seize opportunities if they present themselves. Think about risk/reward and returns on your investment. What about premises ? The next few years could be a good time to move if you are confident and your order book is sound.
