Recent years have been a bit tough for many small businesses, but there are some handy strategies you could implement which may be beneficial, both in good times and bad.
It’s something I say often, and you may have already read my blog article about Cash Flow…but it is worth re-iterating “Cash Flow is King” – the most profitable business can still fail if customers don’t pay. Stay on top of outstanding debtors, chase up invoices which are past agreed terms, and make sure goods/sales are invoiced promptly. Finish as much as you can before starting more work – keep Work in Progress to a minimum…basically, unfinished work is just YOU carrying someone elses needs. It’s no benefit to you until it is done and invoiced.
Keep an eye on stock levels – you need to hold enough stock to service your clients, but it’s better to have your suppliers hold the stock until you need it – excess stock on hand is a drain on your cash reserves.
Keep your books up to date – set aside time to regularly enter your sales and your expenses. This may not feel like it is making you money, but it will help you to stay in touch with your business performance, and it can help you predict up-coming issues. A good idea is to print of cashflow reports at the end of every month if you use a computer package that does this. If you don’t see value in doing this yourself, PAY SOMEONE!!!
Reconcile your Bank Account. This will make sure you haven’t missed any expenses (because your bank won’t balance if something is missing) and it will bring to your attention cash flow issues ahead of time.
Even if you never need it, consider setting up an overdraft or other credit option – it will give you peace of mind and prevent you from having to approach a financier when you are desperate. Finance-on-the-run often means you pay a higher interest rate than if you have it as a contingency.
Often advertising is the first activity that stops when times get tough, but to gain new clients you may need to keep this up. Another thing to consider is that you could increase sales with the client base you already have with a little targeted promotion – are they aware of all the services or products you offer? They already know and trust you…maybe you just need to rethink your marketing strategy.
Talk to your accountant about Key Performance Indicators, or whether they can make any suggestions about where you can “tweak” the way you do things. Changing times mean that you might have to do things a little differently to keep up with the public.
The most successful businesses are the ones that adjust with the market, and where the owner has a “finger on the pulse” – it doesn’t matter how good you are at what you do, if you’ve got no idea what risks and opportunities you are facing.