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Uncertain times are a part and parcel of any small business. While on the one side, uncertainties might give you the jitters, they are also an opportunity to try out something new and smart. A thought-out, calculated strategy to face business uncertainties can go a long way in ensuring that you are ready for that proverbial rainy day.
Here are some actionable tips to get you ready to steer clear of potential surprises:
Reduce Debt and Increase Cash Flow
Easier said than done, but one of the biggest challenges small businesses face in uncertain times is reducing reliance on external finance. This is especially true if your business is not on a growth curve. The only way to combat this is to increase cash flow strategically by:
- Preparing cash flow forecasts
- Marketing goods and services that can easily be turned into cash
- Making timely payments while still using your suppliers’ payment terms optimally
- Keeping fast moving stocks that make way for quick turnover
- Selling unnecessary assets.
Step Up Productivity
The mantra to successful business is to not lose sight of efficiency and effectiveness. Evaluating your business performance against industry benchmarks and your own strategic goals; identifying key drivers, areas of improvement, risks, and opportunities; and monitoring strategies based on these evaluations are recommended best practices. Contact us now to find out more.
Controlling Costs = Savings
Costs will constantly increase but if you don’t want your profits to suffer, you will have to meet costs head on. It is more prudent to cut costs strategically than to slash expenses all around. For instance, push for ‘Just in Time’ delivery or ‘stock on consignment’ to reduce storage costs. And don’t forget to compare your cost structure to those of others in your industry and your own past results. Remember, information is power!
Risk Management in Key
It is no big secret that the biggest threat of uncertain times is risk. Being prepared with a strong risk management strategy can ensure you remain in the safe zone. Don’t rely too heavily on one supplier, customer, or resource. Always check thoroughly before selling on credit and be ever ready to sniff out fraud. It is important to have proper insurances in place to assist manage risk like fraud. If there is a need, one of our strategic alliances are always happy to help protect against this sort of thing. Think the adage about not putting all your eggs in one basket.
Be Open to Change
Your business plan shouldn’t be cast in stone; re-evaluate your assumptions, plans, forecasts and budgets to align with changing circumstances. As they say, if there is one thing that is certain, it is that nothing is certain. But nothing says ‘good business’, like staying prepared!