Stand back and review the risks that face
your business.
Consider the impact of slowing cash flow, decreased
turnover,
tighter margins, increasing bad debt risk and what these mean for
your business. Assess your peculiar risk exposures and whether defensive
action is required. |
| Understand your market. What are your
customers and suppliers going through and how will this affect you? |
| Establish KPIs and monitor them diligently.
For example, calculate your breakeven point and daily or weekly revenue
targets and track these carefully. |
| Understand what is around the corner. Monitor your forward orders and
plan accordingly. Send staff on leave if there is a quiet patch ahead. |
| 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. |
| 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. |
| 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! |
| 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. |
|
Protect your business relationships. In a competitive market your customers
will have plenty of approaches from your competitors. Stay close to your
customers. |
| 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. |
| 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. |
| 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. |
| 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. |
| 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! |
| 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. |
| Keep your bankers informed. In difficult times it is vital that you stay
close to your bankers – don’t surprise them! |
| Manage your personal spending as well as business costs. Be willing to make
the hard decisions at home as well as at work. |
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