How do you make your business more resilient?
Here are our top tips to make your business more resilient:
- Forecast Sales – Talk to your customers about the outlook and their reaction to the current market conditions; a realistic Sales Forecast is invaluable in helping plan any business.
- Key Performance Indicators (KPIs) – Determine what the Key Performance Indicators are for your business, including the lead indicators for business generation such as sales prospects and meeting conversion rates. Ensure these are produced regularly and heed what they say.
- Weekly Cash flow forecasts – Produce regular weekly cash flow forecasts which help identify key financial stress while there is still time to manage it.
- Management Accounts – Ensure that Monthly Management Accounts are produced which are timely, accurate and meaningful, so help inform your decisions. Management Accounts that track progress against your budget or plan stimulate questions and strategies to bring the business back to plan.
- Avoid over-reliance on one major customer – Don’t allow your business to become heavily reliant on any one customer as this massively increases the vulnerability of a business. If your largest customer accounts for more than 10% of your turnover warnings bells should be ringing.
- Manage Customer Debts – If your largest customer went bust how much would you loose? Balance this thought with the ongoing profit such a customer generates each month.
- Check out your customers – Rather than looking at insuring your Debtors it is better practice to assess all potential customers and to set credit limits for each one. This helps you to manage individual customer exposure.
- Re-Engineer your business model – If your forecast sales are down significantly then you must review your business overheads critically to enable you to ‘cut your cloth’ accordingly. Putting off this critical review could be fatal for your business.
- Talk to the Bank – Keep talking to your bank manager, keeping him updated with both positive news but also let him or her know the challenges your business is facing and how you are managing the situation. The bank’s support through testing times is vital.
- Keep Smiling! – These are tough times but good businesses will survive and emerge later stronger as a result.
