12 March, 2009
By Author: Gene Lewis, Director Sales & Marketing, Intuit Global Business Division
With the current financial crisis set to continue and most small businesses preparing for tough times in 2009, you should be looking at effective ways to survive a potentially long-lasting recession. While there may not be a magic wand for ensuring survival during a downturn, Intuit has some practical advice that will aid you in navigating the stormy weather ahead and, more importantly, help you sail through calmer waters on the other side. Here are Intuit's top 10 tips to successfully steer your business through the current economic climate:
Manage cash flow --It won't guarantee you a fortune but cash flow management can unlock capital, transform your bottom line and safeguard your future in uncertain times. Look at your relationships with banks, suppliers and customers and check if you are fully aware of all payment dates and their terms. Investigate if there is anything that could be modified to help you maintain a healthy cash flow, such as moving key dates and adjusting payment terms. Also, identify potential cash flow problems by forecasting peaks and troughs in your cash balance and keep an eye on market conditions.
Track finances --As part of managing your cash, the inflow and outflow of cash needs careful monitoring. Be fully aware of how much you spend and for what. This can be achieved by making sure all aspects of accounting are in order and effectively managed. Keep on top of your bookkeeping right from the beginning. Don't be tempted to put off your paperwork, otherwise you risk forgetting crucial costs or even worse failing to invoice a customer. Don't miss payment and tax deadlines to avoid paying fines.
Keep on top of debt --Along with a healthy cash flow, good credit control is essential to any business and no company can afford to not take it seriously, especially when the availability of credit is tight. Make sure to keep an eye on your debtors and credit check new customers where you can --but do not simply rely on credit ratings, make your own assessments on their propensity to pay. Once you decide to take on a new customer, agree payment terms at the order stage and make them very clear. Printing these terms on easy-to-understand invoices that go out on time can also help prompt debtors to pay. At the same time, ensure you keep on top of any debt you may have by paying off any balances without incurring charges.
Cut costs/save money --Cutting down on unnecessary expenditure can be the difference between keeping your ship afloat or going under during these difficult times. While making staff redundancies is the last resort, it doesn't have to get to that stage if you follow some simple money-saving rules. These include curtailing the amount of tax you pay via energy-efficient company cars or bringing in a spouse as a partner, haggling when buying to knock off a few extra pennies, and slashing utility bills by shopping around and looking for the best deals.
Talk to the banks --Borrowing terms have tightened as we all know and many businesses are struggling to obtain credit or renew their credit facilities. Whether this applies to you or not, it is worth striking up or maintaining a meaningful dialogue with your bank as many look to focus on customer loyalty. Review your bank charges and ask yourself if you could switch accounts and find a better deal with a new bank or if your current bank could offer you any special deals as a long-serving customer. When it comes to rolling over banking facilities, watch out for hidden charges and factor these into financial planning if necessary or look to secure alternative forms of finance such as asset based lending.
Focus strategy --Adjusting company strategy to take into account of market conditions is essential and directing your strategy towards your business' core activities often helps during a downturn. The premise is to keep doing what you do best. Assess whether your current strategy is still valid and whether you can exit non-core activities to ensure you have sufficient cash for the principal business.
Small client/big client --During an economic slowdown, bigger players operating in the same field of that of your company's are likely to focus their resources on more important and profitable clients. As a result, some smaller clients may be neglected and not looked after as usual. Take this opportunity to reach out to new prospects and maximize on your competitors' shortcomings.
Understand customers --Paying attention to your existing customers is just as vital as trying to generate new leads. Get to know them better by showing an understanding of their issues and work with them to find affordable solutions to their needs. It would be unwise to approach your existing clients, as well as prospective customers, with the same old sales pitch.
Stay above the radar --No recession lasts forever so when the economic upturn finally arrives, the name of your business should be at the forefront of people's minds. To achieve this, maintain a proactive approach to your marketing activity, investing in quality rather than quantity. The world that we live in now throws up a whole host of cheap and even free marketing opportunities so take advantage of the internet and networking at forums and events.
Spend right -- Despite the downturn, you cannot afford to stop investing in technology, in particular IT. Not only is it important strategically but it can help your business stay competitive and innovative. You don't have to go out and get the latest in cutting edge technology but purchasing some simple accounting software could go a long way in streamlining your business and separating you from the rest.
The coming year will be one of uncertainty and opportunity. While there is not much you can do to control the economy or how much your customers are spending, follow these simple steps to ensure your business stays in good health and that you set yourself up to take advantage of the upturn when it comes around.
Betsey Nash, SPHR
Human Resources Consultant
United Staffing Associates
805.269.2677 x 23
805.269-2687
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