Top Tips For Small Business In Tough Times
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Judy Hartcher, CEO of the Finance & Treasury Association, has six top tips to help you though the recession…
Improve Cash Flow
“Cash is king” so delay capital purchases, extend payment times, collect outstanding debts quickly and bank regularly, use trade credit or credit cards, ask for progress payments. A business can post a loss and still survive but it can only run out of cash once.
Review all costs and cut out waste, be careful not to cut where you may need resources, review product lines and cut non-profitable lines. Now is a good time to focus on efficiency gains but don’t cut into your operational base unnecessarily.
Don’t tie up cash in large inventories, get rid of old stock, only hold what you need, buy in small quantities.
Focus On Service
Keeping a customer is easier than getting a new one – know which customers are your best and provide excellent service. Differentiate your business through service – listen to your customers needs and be ahead of the game.
Don’t Slash Prices!
Cutting prices might be a way to get cash into the business and sales increase volume but you will have to replace the stock at higher prices. You will reduce your profit margins and could dilute your brand in the process. Customers might expect similar reductions in the future. You should know the contribution of products to profit. It might be more profitable to increase prices and sell fewer than cut prices and sell more. Offer incentives like a second item for half price to increase your sales.
Watch What Is happening in the market!
Be aware of your customers, competitors, market, suppliers and try to stay in front of any changing trends. Be ready to take advantage of improving conditions.
About the Author…
Judy Hartcher is CEO of the Finance & Treasury Association which assists professionals working across all aspects of treasury and financial risk management.