Our top 10 tips on surviving the downturn


1. Watch that cash

Cash is king…especially when times get tough. Whilst turnover and profit is important, it is the cash in your bank account that allows your business to function today. Watch it daily, keep track of what’s coming in and what’s going out and understand it. Know where you stand today and how your cash flow will be over the next few months. Build a reserve if you can to balance a good month with known poor month ahead. Keep track with weekly or monthly management accounts, spot any problem areas early then do something about it.

2. Watch that credit

What are the credit terms offered by your suppliers and how do they compare with the terms you offer your customers? Check new credit accounts for customers, make sure they are credit worthy and don’t take big risks. Make sure you are on top of collections and any bad debt. Squeeze the most credit you can from suppliers but keep them on your side.

3. Keep in touch with your Bank

Banks have a habit of letting you down at the wrong time….don’t give them an excuse to do so! They are also adverse to risk so let your bank manager know you are not a risk. Manage your bank account and do not go into unauthorised OD or bounce payments, if you think you will need facilities meet with them early with a plan and a proposal. Let them know that you are organised and in control of your business.

4. Look after your suppliers

Keep good relationships with your suppliers, things can change very quickly so stay in touch. Work with your suppliers not against them, you may need to call on them for a favour! Watch out for any early signs of failure and prepare for alternative arrangements.

5. Look after customers

It is much cheaper to look after existing customers than get new ones so look after them. Find out who your best customers are, usually the top 20% of them will be providing 80% of your income! Communicating with your customers is always a great idea and focus on your customer experience. Look at ways you can increase revenue from existing customers.

6. Look at your costs

Review costs even the small ones. Cut out costs that are not really productive and cut down wherever possible without damage. Look at the way you work, travel, entertain etc are all your employees really occupied or can things be done more efficiently. The important thing here is not to cut the wrong areas, costs which are conducive to earning revenue should be carefully assessed. Think twice about redundancy, it can have a negative impact on morale.

7. Look after your people

Sounds strange, but the truth is that when times are tougher you may feel more stressed and take it out on those near you or close to you….it’s not their fault. Keep your team informed, they may be nervous too. If its quiet, use the time positively to catch up on outstanding work, do something creative or train them to improve their skills, or send them to the many free training schemes available, it will pay you dividends, but don’t let them sit there doing nothing positive. Keep morale high and motivate staff to contribute to the company’s survival and well being.

8. Review security and redundancy planning

When times get hard, business is hard enough to come by anyway so don’t let unexpected adversities catch you out….they can break a business in difficult times. Take a look at insurance cover, the back up and redundancy solutions for your computers, data and website, IP security, internet security and not least of all physical security for your premises (crime goes up in a downturn).

9. Review marketing strategy

It is amazing that the first thing some managers cut when the going gets tough is the marketing budget! This is not the answer…review your strategy, what’s working what’s not working, what else can be done? If you don’t have the skills in-house bring in experts to see how you can get the most out of your spend. When you have a winning formula consider increasing the spend, remember you will be fighting for business from a smaller pot. Also consider exploring new ideas, products or services, and routes to market e.g. online or export etc. Focus on stuff that sells and the ones that make profit, cut out or reduce the others.

10. Review the big picture

Even if you hate business plans, forecasts and all that stuff, this is the time that it is most important that you pay attention in this area. When things are good it is easier to plod on, but in a downturn you need to be fully alert and aware. Look at the overall business, what’s working, what’s not, is the business proposition still viable? Are you still making money or losing it, should you consider down-sizing or acquiring a competitor at a bargain price. Is the way that you have always run your business still the best way, or can this be improved? If you have any doubt whether your business is going to make it, get professional advice immediatley.

In a downturn it is back to the “survival of the fittest” a fit business will not only survive but cash in on the opportunities during the downturn and on the way out when the market recovers. Where are you going to position your business?