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Stand back and review the risks that face your business. Consider
the impact of slowing cash flow, decreased turnover, tighter margins,
increased bad debt risk and what this will mean for your business.
Assess your particular risk exposures and whether defensive action is
required. |
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Understand your
market.
What are your customers and suppliers going through and how will this
affect you? |
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Establish Key
Performance Indicators (KPIs) and monitor them diligently.
For example, calculate your breakeven point and daily or weekly revenue
targets and track these carefully. |
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Understand what is
around the corner.
Monitor your forward
orders and plan accordingly. Send staff on leave if there is a quiet
patch ahead. |
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Ensure you are on
top of your financial reporting.
In tough times, it is even more important for you to know exactly where
you are at. You must know your outstanding debtors, stock levels,
creditors to be paid, actual profit or loss last month and what your
cash flow will be for the next month. |
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Manage margin as
well as revenue.
Maintaining sales at
the expense of margin means you are going backwards. Accepting low
margin sales to generate cash flow can be a way of running down stock
levels but it is not a good recipe for success over the long haul.
Understand the impact of decreasing margins. |
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Control your
stock.
Get rid of slow-moving and obsolete stock that occupies space and ties
up cash resources. Ensure you have the right stock in the right
quantities. Don’t be tempted by volume discounts that result in stock
level increases. Cash is king! |
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Build on and
protect your niche market.
Your niche market or specialisation is your competitive advantage so be
proactive in protecting it and building it. |
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Protect your
business relationships.
In a competitive market your customers will have plenty of approaches
from your competitors. Stay close to your customers. |
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Review all
operating costs.
Now is the time to review costs, not later! Tighten up on approval
processes so that optional spending is carefully controlled. |
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Manage your cash
flow carefully.
Consider ways of
smoothing your cash flow such as running down stocks, tightening up on
debtor collections or disposing of surplus vehicles or plant. |
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Review your
finance facilities.
If you have a sound
security position you may be able to defer principal reductions or
restructure your finances to achieve a lower cost of funds and reduced
monthly outflows. |
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Be flexible.
Consider ways to maintain the business at a lower cost. Trade off total
hours in fixed time slots for reduced, flexible hours. Encourage staff
to take accrued leave. |
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Be realistic but
maintain a positive attitude.
Don’t bank on hopes and expectations. Be realistic in your assessments
and act accordingly. Make the hard decisions but don’t let negative
sentiment overtake. Enthusiasm is contagious. |
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Make good use of
idle capacity.
Reinvest in the things you never seem to get to: systems, promotion,
image etc. This will strengthen your business for the future. |
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Keep your bankers
informed.
In difficult times it is vital that you stay close to your bankers –
don’t surprise them! |
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Manage your
personal spending as well as business costs.
Be willing to make the hard decisions at home as well as at work. |
