Business Survival Tips
10 TIPS FOR YOUR BUSINESS TO SURVIVE A RECESSION OR A CREDIT CRUNCH
1. Prepare or update your business plan
All
business owners/managers need to understand where they make or lose
money and need to foresee the impact on the business of different
scenarios occurring, i.e. drop in sales, an increase in interest rates
or the level of bank funding being restricted
2. Maintain up to date Management Accounts
If
you have a business plan and you should have one, then you need to
maintain up to date financials, i.e. management accounts so that you can
measure the performance of the business against your business plan and
take action if you are deviating from the plan
3. Cut costs as soon as you can
It
is important to act fast if turnover and profits are dropping and you
need to make decisions in relation to which costs you need to adjust. A
lot of businesses have left it too late and their cash reserves are now
depleted
4. Cashflow is King!
This
is critical in a recession and even more so in a Credit Crunch as your
business can not rely on normal bank lending to plug the gaps. You
should keep a tight control over your credit terms and ensure that
payments are received on time. You should also ensure that you aren’t
carrying excess stock or have idle assets that could otherwise be turned
into cash. You should try and negotiate extended credit terms with your
suppliers and pay Revenue on a monthly basis rather than looking for
the lump sum when the returns are being filed.
5. Check your terms of credit
If
you give credit to your customers remember they may not be able to pay
or may be insolvent but when you find this out it maybe too late. Make
sure your terms of credit cover you regarding late payment interest,
termination of contracts and retention of title to the goods.
You should also do credit checks on large customers by using the services of Vision-net or Solocheck.
6. Take your chances
In
a recession or credit crunch some businesses will fail, however, others
will be well positioned to take the opportunity to buy these businesses
or take over their customers, so be ready to take your chances!
7. Buy assets or take security
If
you own a limited company and you are personally considering putting
your own funds or pledging your personal assets as additional security
to resolve an issue with a creditor such as the Revenue or with the
Bank, you should seek expert advice before doing so to ensure that this
is the best course of action for you and the company
8. Be able to stand over your decisions
This
is particularly relevant to company directors where the company is
insolvent, you need to be able to justify your decisions, as in such
circumstances there may be legal implications for you personally – you
should seek expert advice if in doubt
9. Remain in control
Where
your company is insolvent and under pressure from creditors including
banks it is important that you do not allow them to dictate to you how
you should run the business and/or resolve the situation. You will find
yourself immersed in the problem and not given the time to step back
from the problem and assess the options, that’s where an independent
expert can help – don’t leave it too late, get help early
10. Don’t suffer sleepless nights
You
shouldn’t have sleepless nights about your business, this will affect
your physical and mental health and could also affect your relationship
with your family & friends.
Get held and advice from your Accountant, Solicitor and financial advisor and if necessary seek out an Insolvency Expert
