A tough year ahead for business

Make sure you are one of the survivors

There is little doubt that 2009 will be a tough year for many businesses. So it is essential to ensure that you have the right strategy in place to make sure you are one of the survivors when the economy eventually recovers.
There are a number of areas to consider, in particular making sure that you are only paying for those services and items that are essential to the survival of your business. A caveat to this is that you should not cut back on the areas that will continue to give your business a competitive edge, so for example, completely stopping your marketing activities could even compound the problem and make matters even worse.

Be professional, but be firm with customers who are late paying. During difficult times, steady cashflow is the lifeblood of day to day business. Don’t leave it too late to chase outstanding accounts, the longer an account is left unpaid, the more likely it is to remain unpaid.

Your bank could play a vital role in getting you through the hard times. It makes sense to build a good relationship to increase your chances of success. Make sure you are getting the most from your accounts and are not paying excessive charges. If you are thinking about changing banks then always read the small print.
Make your money work for you by always getting a competitive rate of interest on monies held on deposit. Don’t leave too much money in your current account, most banks allow you to transfer funds quickly between current and deposit accounts allowing you to earn as much interest as possible.

If the business is falling behind on its liabilities, never ignore the situation. Go back to your budget and work out a plan of action. Get professional help if you need it.
Too many businesses fail because of a lack of cash, not profitability. Review cashflow regularly, and carefully balance any credit given to customers against your suppliers’ terms. Getting the right balance between investing in the business’ future and surviving can be difficult. Be extra careful when evaluating investment opportunities in a downturn.

Bank and credit card penalties and fees waste money. Work out a system that reminds you when bills are due, and control your cashflow. Reclaim unfair penalties and if possible, increase your current account overdraft to a level you plan never to use. This will help buffer cashflow, and avoid paying unnecessary fees. But be disciplined. This is not an excuse to spend money you don’t have.

Apathy is your finance’s worse enemy and your suppliers’ best friend. Make sure you are getting the best value for money but don’t forget to check that the product or service meets your needs.