10 tips for survival
* Accounts – make sure your accounts are up to date, and as accurate as possible. Monitor them carefull
* Bank – If you are borrowing money, make sure you are aware of the bank’s attitude. Don’t let them pull a fast one. If you are having difficulties keep them informed, but keep it as positive as you can. Some are more helpful than others. If you have surplus cash and are pacing it on deposit don’t necessarily go for th highest interst rate. The higher the reward the greater the risk. Better to use your cash to get discounts from suppliers for fast payment.
* Cash – the old cliche cash is king is never truer than today. Make sure you are keeping your cashflow forecasts up to date. At times like this they need to be done frequently. Make sure they are calculated on a conservative (prudent basis. Overoptimistic cashflow usuall;y leads to trouble.
* Creditors – By all means take a little extra credit, but don’t overdo it. Don’t let them balloon out of control. Suppliers have a habit of talking to each other and if you have taken extended credit from everybody they may go for you. If you are generating cash use it to get better prices.
* Debtors – Your customers are the first port of call for cash. Monitor them closely, and if customers are paying you late find out by ringing them The quickest, cheapest and most effective way to chase money is by telephone. Don’t leave the monitoring or chasing to some junior person. Top management must get involved. Do you best to drive down Debtor Days. It’s money straight in the bank.
* Forecasting – is the key to success, in good times as well as bad. Looking ahead is in itself beneficial. The earlier you spot a problem the earlier you can mitigate its effects.
* Innovation – Difficult times breed innovation. Put your brain on overtime.
* Margin – one big danger in difficult times is the temptation to chase business by reducing margin. It is very important that you hang onto your margin. If yo have to reduce prices, make sure you reduce overheads accordingly.
* Overheads – Keep these strongly in check. Look for cost which are dispensable. If you have to cut, do not cut so deeply that you cripple the business.
* Stock – Keeping a grip on stock is never easy. But more vigilance is required than ever before. Stock ties up cash, so do what you can to improve Stock Turn.
* Trends – Look at trends. This is the easiest way to see what is happening to the sales; volume; margin; net profit and return on sales and overheads. If you process your data on a consistent basis, your trends will not lie to you. This is an extra. Always give your customers just a bit more than they expect but not too much.