1. Take Control of Your Debtors / Receivables
Start monitoring your accounts receivable on a more regular basis. Take note of any change in the payment pattern of your regular customers. Arrange for part payment where it becomes clear a customer is having trouble making payment. Make sure you send out monthly statements immediately after the end of a month. Follow up on slow payers.
2. Are Your Own Finances and Working Capital in Order
Consider the possibility of an extended downturn. Do you have adequate working capital? Should you talk to your Bank manager now to secure extra funding- just in case of a sales downturn or one of your customers not being able to pay.
3. Manage Your Costs
Focus on becoming more efficient. Look at making targeted rather than across the board cost cutting. Reduce unnecessary complexity in your business model.
4. Ensure You Have up to Date Financial Information
Many small businesses see their financial accounts as once a year job to prepare their tax returns, often many months after the year-end. You need to have regular financial reporting information and be using this to tell you where your business is at. There is no reason that this cannot be done on a quarterly basis as this process is necessary anyway for the quarterly BAS preparation.
5. Key Performance Indicators (KPI’s)
Management is about decision making. And decision making needs to be based on facts. Now is the time to prepare those budgeted forecasts (that you have been putting off for years!). Define your KPI’S and prepare various scenarios based on different sales levels and cost cutting models.
6. Your Employees
Keep them in the picture. Regular and clear communications will maintain their loyalty and confidence. Let them know that you have things under control and that their job is safe.
7. Other Shareholders / Stakeholders
Have regular meetings and discussions with your other stakeholders. Discuss the likely impact of any severe downturn. Keep the level of trust up with open and regular dialogue.
8. Make the Tough Decisions
If you need to make a tough decision it is better to make it early and decisively. Don’t sit back and hope that things will change by themselves.
9. Your Personal Lifestyle Costs
Are there cost savings you can make with your personal lifestyle? Ultimately these costs have to be taken out of the business in one way or another. A dollar saved is a dollar earned. More in fact, if you take the personal income tax that you pay on wages and Directors fees.
10. Take Advantage of New Opportunities
This could be the time to negotiate more favourable terms with your suppliers. Also look for new growth areas that could open up due to the changed economic circumstances.