Will Your Business Survive In A Downturn?
Graham Winmill - 18th September 2008
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Please take time to read our article and take action now
for your business before your competitors get the
edge.
A challenging time for business can be the best time to secure
your long term future and prosperity. It is even more important
to be smarter than your competitors.
If one company takes action to respond to the situation and one
company just hopes for the best, who is the most likely to
survive and be ready for the upturn?
If you want to do nothing and hope for the best, don't read on.
You will have plenty of time for reading when your competitors
manage the downturn better.
So where to start. Take a look at the world around you and
assess the risks. What is the effect of a downturn going to be
on those areas that affect your business:
Sales & Marketing - Redouble Sales
Effort
Sales are the lifeblood of your business but a lot of
MD's/Owners do not like the sales side of business and rather
let it happen. Not anymore.
Good salesmanship is not actually that difficult. It is mostly
common sense - know who is buying and not buying. Talk to the
ones who have not placed an order this month and understand
why. Is there any fundamental change likely in their buying
pattern? Do you know how much share of business you have with
each of your customers? Can it be increased?
It is much easier to get business from existing customers than
capturing new ones. Are there some obvious customers who you do
not trade with? What about an action plan to start a dialogue
with them?
- Is your service good?
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What can you do better?
Examine your pricing. When did you last increase prices? You
may have to find the courage to put prices up but if you don't
- Are there some low cost marketing actions that you can
do?
Websites are not expensive and can replace expensive and
quickly out of date brochures.
ACTION STEPS
* Put a Sales & Marketing
Plan together, now
* Review your pricing strategy
* Sell, Sell, Sell
Operations & Resources - Doing the right thing,
efficiently
When times are good we all get into a "nice to have" syndrome.
Things get added because we think it might make life easier or
better. In tough times decide what is really essential and what
can be done without.
Look at your headcount. Make a 10% headcount cut part of your
contingency plan. Usually there is someone whose performance is
not satisfactory but the issue has not been tackled. If they
need to go, should you start the process of removing them
anyway? Make sure you use an HR Specialist to help with this.
It can be done but has to be done correctly.
Often things can be made simpler and better. Time for radical
thought. Look at how you're doing things and see what can be
done to improve effectiveness and efficiency.
Usually the people doing these things know most about them. So
If you have staff involved in these activities get them
involved too. Set up improvement teams. Give the projects
titles and make a fuss of them. Review them regularly. Do it
now while you still have the luxury of time and cash.
Communicate with your staff, management team, customers,
suppliers and other stakeholders to keep them informed of what
is happening with the business.
ACTION STEPS
* Review your staffing-
consider outsourced services
* Reduce inefficiencies and waste in your business
* Implement good, operational business processes
Finance - Cash is King
Cashflow has to be the number one priority. If you run out of
money the business is dead and all the hardwork you have done
is down the pan. And maybe your house with it!
So:
-Do you know your break-even?
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Do you have a monthly cashflow forecast for the next 3
months?
These are two essential measures of the health of your
business. If you do have them, we would recommend you start to
do them right away. Most businesses know their costs base
pretty well and what orders their customers are likely to place
in the next month.
Forecasting sales for months 2 and 3 can be more difficult.
Moving annual totals come highly recommended to cover the
future trends in sales. You will quickly spot the turning
points when sales go flat and subsequently start to turn
down.
Clearly if the sales trend is down and approaching your
break-even you need to take action. If you are not in this
situation you should at least have a contingency plan to reduce
costs. You also need to know how long these are likely to take
to come into effect. It takes time to reduce costs. Your
cashflow forecast can be used to see how this works.
Review your credit control processes.
-Do you get a signed order for everything?
-Do you get proof of delivery for goods?
Make sure you have processes in place to follow up quickly with
late payers.
ACTION STEPS
* Review your cashflow now
* Look at cost reduction and where savings can be made
* Focus on getting money in that is owed
Conclusion
The old adage "failing to plan is planning to fail" is so apt
for recessionary times. So start as you mean to go on.
It's easy to make lists, much harder to actually make things
happen.
If you'd like some help with this give us a call and we'd be
delighted to help. You'd be surprised what can be achieved in a
short space of time.
And how much more gets done with regular review dates with us
to help you make sure that you really do implement your action
plan.
If you are nervous about your future and you are interested in
help with the above actions -
Contact us today on the numbers below before it is too late for
your business!
That's all, now get back to
work.
Graham Winmill AInstIB
Invest two hours of your time to grow
your
business
Call Graham
on 0800 1300
534 Now
For your Free
Business Assessment
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