With a sluggish economy, consumers still in hibernation and business confidence muted, many small to medium sized family businesses are struggling. They are experiencing a lack of consistent turnover and hence profit and cashflow is tight.
What are the options?
1. Do nothing.
Draw down the curtains and hope like hell this is a bad dream. This is a high risk strategy and probably the business will fail. The current recession is not a short term wonder and the next few years could see more of the same.
2. Fight like hell for profitable turnover.
This means the sales effort has to be doubled, if not trebled. It’s about taking sales off your competitors and loving your existing customers to death. It may also mean selectively marginally pricing to gain extra turnover. Make sure your sales price covers all direct costs and makes a contribution to overheads don’t marginally cost all business or you will go broke.
3. Look at costs.
Approach suppliers for a sharper price and longer credit terms.
4. Review all overhead costs.
If it’s not essential don’t spend it.
5. Conserve cash.
Approach the landlord for a rental holiday or payment deferral.
6. Approach the bank or finance company and ask for loans to be interest only for 6 to 12 months.
7. Retain the core components of your business.
Brand, quality, service, key staff, key location etc.
In business it’s important to survive first. Those that do will become very profitable once the economy turns. The business will have a low cost base, a strong focus on the core business and fewer competitors.