Bulletproof Your Business
17 Tips to Guide you and your business through a recession
- Understand and know your margins
- Gross Margin
- Net Margin
- Increase prices now!
If competitors are charging more than you – are they really that much better than you?
In an economic downturn you are going to need cash reserves – this is one of the best and easiest ways of building these.
- Marketing (Market the hell out of your business!)
Do tons of marketing now – before you need it.
Focus on marketing your highest margin product of service as this is going to give you the best ability to build cash reserves as per tip #2.
- Make sure your accounts are up to date
- You will need them to be able to make good decisions for your business.
If they are not up to date then you are making your decisions based on poor and out of date information
- Decisions will be made on feelings not facts – and that doesn’t often work out well.
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- Slow Down
Slow down the rate that cash is leaving your business.
Reduce your Cash-Gap
- Use the terms to your advantage e.g. if you have got 30 day terms with your suppliers then pay on Day 30 – renegotiate for longer terms (if you are able to)
- Make sure your terms are the tightest for your customers paying you. If you have got 30 day terms, can you reduce these to 14 or 7 day payment terms?
Are you taking deposits and/or interim payments?
If you have stock, can you pay your supplier when they are sold, on consignment style or a Just-In-Time (JIT) system?
Have a JIT system in place for ordering your stock – don’t just have it sitting on your shelves.
Fix this now before the downturn or you are likely to have serious cash-flow problems and have cash-flow chaos.
Aim to have more money coming in than going out.
A common scenario when cash-flow gets tight is to go to the bank for an operational loan – this will be more difficult to arrange in a downturn if your cash-flow forecast and/or accounts are not up to date.
6 Scenario Planning – 3 Different scenario’s
- Nothing happens, business as usual – Downturn and/or recession doesn’t happen.
- Recession does happen – what’s the best case scenario in this instance.
- Recession does happen – what’s the worst case scenario for you
You may be able to get your accountant to help you with these.
- Do a break-even analysis on the 3 scenario’s above. (Again your accountant may be able to help with this or use a break-even tool)
- Have numerous bank accounts and use them. It is good to have at least 3 bank accounts so that you are aware of what money belongs to you, what belongs to the Government and what you are able to use for business operations.
It is best to have: Operating Account – Day to day running of your business
Tax Account – VAT and Corporation Tax provision
Profit – Retained profit into here.
- Strategic Partners
Develop relationships with non-competing alliances with a similar target market. Each scratch each other’s backs for revenue. This is a cost effective way of getting new leads.
Each week set aside time to nurture these alliances.
- Have your HR contracts up to date.
Make sure that your HR contracts are up to date and bulletproof, so they are ready to use, if necessary.
During a downturn it may be necessary to lay people off to save the company. This needs to be as seamless as possible. It is hard enough without having extra grief at that time.
If your company doesn’t survive then you can’t help a single person. When it does, because you did what was necessary to save it, you have the ability to help more and more people as it is built up again.
- Don’t Pimp your company!!!
Only get what you need to help your business – not top of the range!
Consider in your business where you might have or are going to overspend and if you can cut back or choose whether or not you actually need to buy it at this time.
- Accelerate the decision making process in your business. If you are feeling fearful, the decision making process is slowed down or stops.
Speedy decision making is needed to keep money in your business. Ask yourself these questions to help:
- What’s the upside of this?
- What’s the downside of this? Ask someone who is independent to help with this
- Can I live with the downside? Only Pro’s seem to ask this question.
- Find your competitive advantage – Out serve your competition!!
Consistently provide a level of service that is greater than your customers are expecting.
Look at your customer’s walk through your business and at every point of contact they have with your business now and get clear on what is actually happening at each point of contact.
Ask yourself if you are meeting the customer’s expectation, then if you are, brain-storm how you might be able to exceed them – The WOW factor – systemise this so that everyone does the same for each customer.
- Do NOT get into price wars – it is a race to the bottom!
In a downturn the number of enquiries slows down. When this happens many people feel the need to discount prices. When emotions go up, intellect goes down.
Whenever you discount prices, sales need to increase, often significantly, just to stand still in the business. This means you are working much harder for no gain – a recipe for great stress.
- Improve your sales process and sales skills.
Measure your sales process at each stage so you can see where people are dropping out and you can start up skilling to improve retention & improve your conversion throughout the sales process.
- Improve your communication with your suppliers, your team and your customers.
Stop the “story-making” out of fear through great communication.
Show you really care about your customers by keeping in touch with them e.g. Thank you card for purchasing from you (they have lots of choice out there). You will really stand out from your competition.
- Create your battle plan for victory.
Dreams X Goals X Learning X Battle Plan X Action = SUCCESS
Score each out of 10 so success = 100 000 then work to be as near to SUCCESS as possible.
What are you learning now?
What are your actions now?
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