With the global financial crisis reaching meltdown, constant doom and gloom in daily headlines and industry experts claiming the UK is fast heading to a full-blown recession, the cream of the region’s top businesses are warning firms that only the very fittest will survive.
Sue Baker, project director of Beacon South West, said: “These are unprecedented and trying times for the region’s business community. The size and scale of the global economic crisis has taken businesses large and small by surprise and we are all in uncharted waters. That said, this is not a time for throwing in the towel, it’s a time for action and the following pointers from the regions’ best strategic business thinkers will help.”
- Avoid cash flow woes – managing cash flow is the single most important thing you can do right now, it will mean the difference between survival and failure. Scrutinise everything. Monitor performance against budget and cash flow regularly to anticipate problems before they arise. Leave nothing to chance. Issue invoices promptly and chase up debtors.
- Trim the fat – take a hard look at costs to get your house in order. Trimming the fat from expenses will save cash and boost profitability. Are there areas that can be cut back without impacting quality? Is that business trip really necessary? Are you taking full advantage of your tax allowances? Use price comparison sites, shop around for cheaper deals and think carefully before making any purchases.
- Take stock – holding stock costs money and ties up cash. Plan ahead and keep stock levels to a minimum. Investigate the possibility of more frequent deliveries from suppliers to keep stock levels at a minimum and negotiate longer credit terms to free up more cash.
- Adapt to survive – in times like these, flexibility is a key element of survival. If a business idea isn’t working – move on. Don’t be wedded to the past. If things are tough, consider moving to smaller premises or sublet existing unused space. Sell off excess equipment and look at flexible working practices to improve cost-efficiency.
- Be the best – never has it been more important to provide outstanding service. Customers appreciate businesses that give them more for their money especially in a downturn. First-class service, efficiency, fast delivery and flexible payment terms will all help your business stand out from the rest.
- It’s good to talk - communicate with all key people involved in your business including your bank manager, suppliers and customers. If you tackle issues early on, they won’t develop into business problems later
- Weigh up customers – a handful of customers can provide a large proportion of your profits. Identify your ‘cash cows’ and aim to forge long-lasting relationships with them. Do all you can to keep customers coming back again and again. Exclusive discounts, loyalty schemes and regular communications will make customers feel valued.
- Marketing matters - in a credit crunch, it can be tempting to switch off all marketing spend. However when competing for a smaller pot of money, it is more important than ever to get your brand out there and tell people why they should come to you.
- People power – in lean times, the wage bill always comes under severe scrutiny. However, good people are a valuable resource and one of your most powerful business assets. Hang on to great staff if you can, in good times as well as bad.
- Forget buy now pay later – avoid borrowing excessively as the era of being able to obtain money cheaply is well and truly over. With banks reluctant to lend and the cost of borrowing fluctuating, review your funding options and consider seeking specialist financial advice.
Sue Baker, project director of Beacon South West, adds: “While the credit crunch is proving to be challenging for companies everywhere, only those businesses that rise to the challenge, work smarter, stay lean and hang tough will survive. The importance of getting your business in shape has never been more important and will stand firms in good stead now and into the brave new world of the future.”
The Beacon Summit at Sandy Park Conference Centre in Exeter on 28 October 2008 is being sponsored by St. James’s Partnership, specialist investment banking advisers. The prestigious event, hosted by Beacon South West, will bring together the region’s ‘best in class’ businesses to share innovative ideas and participate in world-class, leading-edge business thinking.
The conference will present an opportunity for business leaders to network with over 200 outstanding decision-makers from a wide range of industry sectors. Places are limited. For further information visit: www.beaconsw.org.
