PENINSULAR BUSINESS SERVICES

The tone of this article is not meant to be heavy-handed: it hopes to provide a pragmatic view of what steps can be taken to keep your business from becoming a statistic in the insolvency tables.

If we all stopped spending on little pleasures like dining at restaurants and visiting sports events etc. the economy would feel the effects and this wouldn’t do much for recovery.  The same is true in our business lives, we still need to spend money on networking, travel and office sundries.  The crux of the matter is the amount we are spending: have we made proper adjustments in order to give our business the best chance of survival in these tough times.

‘Get ahead of the game’ ……

This check list might be of use to you in reviewing your action plan:

Focus on cashflow

Make sure you invoice promptly and chase up outstanding debtors. Strengthen credit control, reduce stock levels, sell surplus assets, negotiate extended credit terms, including so called “time to pay agreements” with HMRC. Obtain up to date credit reports on major customers.

Cut your costs

Look for savings in all areas of your business – are you still getting the best deals from your suppliers – if you don’t have the time to ring round why not use the price comparison sites to check?  Could you get better credit terms? Renegotiate your ‘terms of business’ for slow paying clients: you might make your formal credit terms shorter where possible and perhaps in staged payments?  Could a meeting be held over the phone – it would save you money (and time) if you held a video-call – Skype B2B.  Keep an eye on the simple things: check your equipment is turned off at night.  Make certain you are using the correct postage on mail to avoid penalties.

Add more value – don’t cut prices

Improve what you are offering – look at possible customer care initiatives that add value as opposed to slashing prices that will impact your bottom line and won’t be easily recovered when the crisis has passed.

Increase your marketing

It’s more important than ever that you market your company.  There is as much competition in the market place as always however you are fighting for a smaller pot. Don’t neglect to engage in attraction marketing using social media websites such as Twitter and one that I rate very highly for professional contacts, LinkedIn. (I call LinkedIn ‘the serious professional’s Facebook).

Analyse staffing costs

Could you function with a reduced number of staff?  Could you make more of their existing skills.  Staff is a valuable resource, they may provide you with ideas to help you survive the crunch, and involving them will also be good for team building and morale.

Could staff become home-workers for your business in order that you lose the overhead costs involved in employing them?  You might also consider working with a VA, a virtual assistant who has their own business. They provide expertise on an ‘as-and-when-needed basis’, from their own office-space, at an hourly rate between £20-£40 depending on the nature of the work involved, (This is a very cost effective option if you consider the hourly rate of employing full-time staff can be twice as much cost again).  As a last resort, if absolutely necessary, take advantage of the redundancy payment loan scheme operated by the government.

Communication is essential

Keep in touch with your bank and your professional advisors. The warning signs are more obvious to an observer than they will be to you.  If you think there is trouble ahead, face problems head on and don’t adopt a head in the sand approach.  The earlier you deal with it the more options there are open to you.  Recent case law has clarified that as long as directors act in accordance with professional advice they should avoid personal liability.  Do keep detailed records of all decisions made by minute at board meetings.

Take your chances – when you get them. For every business that fails there will be customers, key personnel and other assets available to those that survive.

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Sources:    AIMS Accountants for Business  and  McTear, Williams & Wood