Top Tips For Small Business In Tough Times
By Stephen Spry : Filed under Your Articles
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.
Control Costs
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.
Reduce Inventories
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.
One extra piece of advice I would add to this list is being better organised in business practices.
If you have systems in place for everything you do in business, you won’t waste time trying to reinvent the wheel every time you attempt a task. If you spend an extra 10 minutes every day searching for files or trying to work out how to do something that you have done before, you will waste about 50 hours a year. That 50 hours could be better spent generating more sales and increasing your productivity.
Simple techniques like centralised record keeping means that if you are looking for specific files, they should all be filed in the same place and arranged chronologically or alphabetically etc. This will make your life easier by reducing stress and giving you more time to focus on what you are best at - getting on with business!!
Cheers.
Jeremy