1 Size up your problems
You won’t be able to create a survival plan unless you know how much of a problem your business faces. Assess your cashflow
for the next 12 months. How do your costs compare with your likely
income? Are there any times when your business will face serious cash
shortages? If your business is to survive, it must be able to overcome
short-term cashflow crises.
2 Seek advice – now
You might not be able to come up with all of the answers, especially
if you’re under pressure and lack experience, but other people can help you. First explore sources of free support and advice, but don’t rule out paying for tailored advice from an accountant
if necessary. When trying to save a business, often it’s wise to seek
dispassionate professional advice from the outside. With their help,
your problems might not turn out to be as insurmountable as you thought.
3 Cut your costs
If you fail to eliminate unnecessary costs, you’ll significantly
hamper your chances of survival. Assess every area of your business and
find ways to eradicate waste and inefficiency. Rule nothing out. Often
survival involves having to make tough decisions. Try to negotiate
better deals with all of your suppliers. If you can save money, explore cheaper alternatives but be warned: cutting too much or in the wrong places can make matters worse, so your decisions need to be well informed.
4 Tighten up your credit control
Having an effective credit control
system can help your cashflow to remain positive, as well as lessening
the chances your business will be affected by bad debts. Overtime,
credit control can become slack, so look for ways to improve your
system. If you are to avoid any nasty surprises, you must remain aware
of your cash position at all times. Explore alternative sources of
finance such as factoring and invoice discounting, because these might offer you a cashflow solution.
5 Improve your offer
Are there any no-cost ways to enhance what you’re offering? Perhaps
you could enhance, update or otherwise improve your products to provide
better value for money. Maybe you could introduce new products/services,
but only if it won’t place even more demands on your time. Don’t rule
out trying new things. As other business fail, there could well be new
opportunities for your business.
6 Assess your prices
Could you justify increasing your prices?
Even a small price increase can make a big difference. If you can’t,
try to reduce your costs. And even if you’re desperate, don’t slash your
prices. Don’t even decrease them unless you’ve worked out whether your
business can afford it. You must protect your margins.
7 Refocus your marketing
Cutting cost doesn’t mean stopping all your marketing activity, but
it does mean stop wasting your time and money on things that don’t
deliver enough sales sales. Reassess your marketing strategy. If you haven’t already done so, explore no-cost and low-cost ways to publicise your business, including social media websites such as Twitter and Facebook. Find ways to ensure your own website
is more effective Ash yourself whether even going back to basics (eg
sticking cards in local shops or carrying out a door-to-door leaflet
drop) would bring additional sales.
8 Sell more to existing customers
Selling to new customers is more difficult and according to some as
much as eight-times more expensive than selling to existing punters. Try
to find ways to sell more to your existing customers,
maybe through offering new products/services or discounts for spending
more. You could offer them rewards for recommending your business to new
customers? Building greater customer loyalty could help your business out of the mire.
9 Stop doing things that don’t make money
You and any employees cannot afford to waste your time doing things
that ultimately do not bring any money into your business – especially
when times are tough. Look for ways to boost efficiency and productivity
so all team members can maximize their contribution to your business.
10 Get full support
Survival is a team game. If your business has employees, you need
their full buy-in if your business is to survive – you can’t do it all
by yourself. Ask your people for their ideas on how you could cut costs
and make more sales. Crucially, you need to make sure employees remain
focused and well motivated. Communication between yourself and your
employees must be good. You should also be in touch with your accountant
for advice while trying to ensure the survival of your business.
Many ‘business turnaround’ experts condense survival strategy into
three key stages. The first is to work out exactly how bad things really
are. The second is to solve the business’s immediate cashflow problem.
The third is to address the fundamental issues that created significant
problems for the business.
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