Business Fit Club give the following guidelines to start the New Year well:-
In the current testing market conditions, it is essential that all businesses,
particularly small and medium-sized enterprises, are properly prepared
for 2011. Sound business and financial planning is consequently vital to
ensure the future well-being of your business.
The following steps can help you and your business to weather the
current conditions and create a solid base for your business in 2011.
Cash flow management
Looking after cash flow is essential in an economic slowdown. You will
soon encounter difficulties if you allow outstanding debts to accumulate, a
problem which is all the more likely in lean times.
Make sure you have a clear policy for invoicing promptly and collecting
debts and that customers are aware of it. Above all, ensure you enforce
it. Pursue outstanding debts with letters and telephone calls and ensure
that your terms of business allow for adding interest on overdue
Look after your customers
In difficult times it becomes harder to attract new customers. Therefore, it
is more important than ever to maintain customer loyalty amongst your
existing ones. You should be having more regular meetings with them to
establish what your customers’ current requirements and issues are. You
must then make sure that you adapt your business offerings accordingly.
Also consider ways of developing and rewarding customer loyalty, such as
selected discounts (especially for early payment), regular mailings or
Avoid reducing prices
If revenue begins to taper off, it can be tempting to cut prices. This can
be a mistake. In a recession unless you are careful your costs will
increase and as a result you may be forced to raise prices to cover this expenditure to ensure profitability. Cutting prices can also have the
negative long-term effect of devaluing your image in the marketplace.
Instead of reducing prices seek to improve customer service in areas that
do not massively increase your costs. For example, adding additional
services or including extra items which perhaps are on your slower selling
Remember that suppliers might raise their prices as well, so try to
negotiate a long term discount with them. Alternatively look for more cost
effective alternative suppliers.
Maintain you marketing efforts
The marketing budget is often the first casualty in a recession, but smart
businesses continue to market through a downturn and position
themselves to take full advantage of the upturn as soon as it starts.
In tough times the marketplace becomes more competitive - you may
need to market more vigorously, not less. If you do not have a strategic
marketing plan, now is the time to draw one up.
Many businesses are proud to announce that all of their work comes from
“word of mouth”. This strategy is excellent, but it is dangerous to rely on
this alone, especially if something goes wrong and a bad news story
circulates about you. It is also somewhat limited to the group of people
who your clients mix with.
Instead, we advocate that you have between 8 and 10 different
marketing strategies to create a comprehensive and cohesive plan for
attracting the prospects that you want for your business.
Look after your employees and any outsourced support
While job cuts may be necessary in some circumstances, you should
always try to retain your key employees: their strengths will help you
through an economic downturn, and you will need them when business
picks up. Keep staff informed about your plans and day to day issues so
that they continue to me motivated.
Many businesses nowadays work with outsourced businesses to provide
elements of production or service delivery. In these situations, you must
ensure that you maintain close liaison with them to ensure that they are
“in tune” with your requirements and that service quality in every sense is
There is no escaping the fact that business conditions are tough.
However, there is strong evidence that businesses that are focussing on
the key elements detailed above are maintaining profitability and will be
well placed when we come out of the recession.
More and more of the larger companies are extending the time they are
taking to pay invoices. This particularly impacts on smaller companies
and can have dire consequences on cash flow.
What can you do to improve the situation?
Most business owners think about cash flow on a day to day basis rather
than thinking much further ahead. Once you have a spreadsheet that
tells you what will be happening with the money in 2 or 3 months time
you will be far more in control of your business and your money.
You must continually review your terms. Can you invoice quicker or
reduce the terms on your invoice? You must implement a credit control
If you are not happy collecting debts yourself, outsource this to someone
who is! Think about other areas of the business where you can outsource
and cut back on your fixed costs or merely free up your time as the
Scrutinise your costs on a regular basis and see if there are areas that
you could save money. Ask yourself – what sort of return are you getting
on your marketing activities – do they need to be reviewed? If they are
working well they may need to be stepped up.
Release cash that you may have tied up in redundant stock. You may
need to think “outside the box” but the longer stock hangs around the
more likely it is to become obsolete!
Business Fit Club 2010
Member since: 10th July 2012
I love Abingdon and am passionate about promoting the businesses and events that are centred there. I want everyone to realise how great they are and how we should all be using them!