Take care of yourself

Over the next few weeks, most smart companies will need to increase both the productivity and the profitability of the business as customers face increases in costs and seek variations in their terms of trade.

SMEs could easily find a rapid escalation in bad debts at the same time as their banks are wanting more and more evidence of improving cashflow.

Here are 10 key actions to be taken before you find yourself to be an April fool who has cut their own pay packets and funded people who are failing to pay on time.

1/ As indicated in The crisis is here, the first action is to adopt the triage principle from the emergency wards – only take on business that has prospects for a profitable relationship. Customers that don’t pay, don’t pay.

2/ Identify product and service lines that produce above-average gross margins in good times and find ways to offer them to good customers with a discount for volume orders. Every staff member needs to focus on sales and order fulfillment to maintain brand presence and encourage effective demand.

3/ Control your cashflow by immediate invoicing and key customer contacts with any that are lagging in their pattern of payments so that your bank sees the money coming in on an “as expected” basis.

4/ Try to build up a set of good customers rather than place all your “begs in one ask-it” by having the risk of a set of key customers going into receivership.

5/ Revise investment plans into two categories – business essentials and business development – and make plans for short and long term to protect cashflow and put something aside for the 2010 expansion.

6/ Spend time on staff consultation and sales training so that your top money spinners realise that they are all working to keep the ship afloat and build a sense of certainty in the face of adversity.

7/ Start working on contingency plans that can be quickly implemented if things get better as a result of the extra funds from the Swan stimulus plans or a change in business supply lines that could create a shift in the normal patterns of business activity.

8/ Trim your inventory and concentrate of firm orders from firm customers by actually going and visiting them.The cost of a cup of coffee can be a vital investment that shows that you care about more than their order book.

9/ Keep in touch with your bookkeeper and your accountant to make sure that you are closely in touch with bank and investor requirements. You need to keep your eyes on cashflow and forward order costs and avoid sudden calls on private sources of capital while you wait for improved lines of credit for your business.

10/ Take care of yourself and your staff team so that the inevitable stress of the next few months does not take you out in terms of illness and key staff turnover.

Nobody knows what tomorrow will bring, but we all know that a little forward planning and careful steps forward ensure that the smart companies will be ready to go when the time is right.

Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton. 

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