These are my top tips for surviving the recession:
- Be brutally honest with yourself – be honest about the state of the business, do not pretend all in the garden is rosey when it isn’t;
- Have a robust business plan – set clear, achievable, goals and have a well defined plan for achieving them. Stick to the plan unless there are compelling reasons not to;
- Understand the finances – do not leave the finances to another, you simply must have a firm grasp of the finances of the business at all times if you are to survive. Prepare monthly management accounts. Know your debtors and creditors figures daily. Let it be known to all within the organisation that failing to meet the forecast will have ramifications for everyone;
- Manage your cash – know exactly where the business is in cash terms every single day, and where you are going. Use the online banking system every morning, first thing. If the cash is not going to plan, address it early and earnestly, before you get embroiled in the other day to day business;
- Collect out all your debts – a customer who does not pay is a donation of time, money and effort, and these resources are precious. If a customer is not paying, assess all the options available for bringing them back in line, and act accordingly and early. Do not prevaricate;
- Adapt your cost structure as best you can for coping with the downturn – try to ensure most of your costs are ‘variable’ i.e. they rise and fall in line with the cash receipts into the business, rather than ‘fixed’ which you have to pay even if you make no sales. Having high fixed costs is like starting every day three steps behind your competitors in a 100 metre dash, for you the race begins before you wake up in the morning;
- Keep your eyes and ears open – be on the look out for what is happening in your sector, with your competitors, in other areas that could impact on your business, and within your own business. Plan and act accordingly;
- Cut out all waste as early as you can – only spend on those things that bring in sales or save you money;
- Get close to your accountant – he should be an integral part of the decision making process. You need to be able to make decisions quickly and confidently, and to do this you need to draw upon the experience of trusted advisors. Do not expect to get through the recession on your own. If your accountant is reactive, then replace him with one that is proactive, who essentially works alongside you.
- Identify and then get very close to all those people you need to make your business successful – these could be key suppliers, key customers, key employees, or your financier. But do not place absolute trust in any of them, circumstances change, relationships sour, people’s best interests change. Have Plans B and C ready for when they do. Don’t put all your eggs in one, two or even three baskets.
This recession is far from over, those businesses who plan, focus their resources, reduce costs and risk, and are adaptable stand a far better chance of surviving than those who simply trust to luck. Many business however will ignore these tips and simply carry on as before hoping that working harder will get them through – doing so is trusting more to good luck than good judgement.