Professional Business Coaches

Professional Business Coaches

7 Secrets of Business Survival

We are all grateful for the wealth-creating opportunities this period of economic growth is giving us. But also recall that it has been nine years since the financial crash. Bountiful economic summers ALWAYS give way to harsh winters. Here are 7 secrets to ensure your survival when the business cycle turns against us.
 

Cash is always king. 1. Cash is always king.  You can tell the economy is approaching the tipping point of a boom when banks are pushing cheap credit everywhere and to everyone. We have become too used to low interest rates and cheap credit. But we all know it makes best sense to remain as liquid as possible, because everybody else will call in cash, and credit will be tight, when the economy crests the boom and slides down toward recession. Having cash on hand in a recession is a powerful lever for acquiring flagging competitors or investing in sales and marketing to boost your relaunch from recession.   Think twice before hiring more people.  
 
 
2. Think twice before hiring more people.  It is one of the most satisfying aspects of running your own business - to spread the wealth around through your wage and salary bill. The converse of this is the trauma of layoffs. In many ways, recruitment can be the easy solution to your productivity bottlenecks. When there never seem to be enough hours in the day, it is too easy to jump to the conclusion that what you need is more "man hours."

World-class businesses make continuous improvement, "business as usual." See our white paper Thriving in a Matrix World. Engage your existing employees in creatively opening up your productivity bottlenecks. 

Make your business debt-free.  3.  Make your business debt-free.  Review your debt obligations today. Make sure they are sustainable, even at two or three times the current rates of interest. Procrastination in this can leave you open to layoffs, downsizing, and even bankruptcy. Better to ease your debt load BEFORE the first signs of economic trouble.

Do not hesitate to restructure your debts. Banks will cut off your cash and even your credit lines in a recession to strengthen their own balance sheets. When they protect themselves, they can leave you hanging out to dry.  
 


Question all discretionary spending. 4Question all discretionary spending.  Embark on an economy drive before there's a cash drought. For example, costly travel and advertising are too often unquestioned expenses. Yet the first can be replaced in many instances by Skype or web conferences, while the second can be reduced to boost your cash reserves. That said, cutting expenditures must be a well-judged balance. Keep up your sales and marketing efforts enough so you emerge from a recession stronger and more competitive. 
 
The important aspect of travel is maintaining customer relationships. Do yours really need regular visits to retain their loyalty? But now is definitely the time -- at the top of the market -- to reduce overheads over the longer term. Put off major capital expenditures (it will be a lot less costly in a recession) and renegotiate rents. Most landlords will dismiss demands out of hand, but if you never ask the question, the answer will always be "no." 

Know your receivables! 5Know your receivables! Administering invoices and controlling credit is time-consuming and tedious and therefore a challenge for busy entrepreneurs. Are you months behind in this key performance endeavor?  When the downturn arrives, you will find normal 30-to-45-day receivable periods stringing out to never, as your clients struggle with their own cash flows. Next month may be too late to collect, and you are tied to a painful financial chain reaction. We have had many clients who struggle with this issue, including two landscaping companies where we helped, by coaching the guys doing the digging, to collect payment on site. Are there unnecessary steps in your invoicing-receivables process? Ask yourself; who are the best-placed people in your enterprise to boost your cash flow? We've also advised clients who were too "nice" and paying their bills early. Thereby restricting their own cash flow. 

At PBC, we recommend regular client contact, keeping your finger on their business pulse, and emphasizing strict payment timelines.

Keep your inventory lean. 6Keep your inventory lean. Cash is the only sensible inventory. Keep necessary levels of supplies, work in progress, and finished goods to support growth and avoid excesses. It is especially bad to let your inventory grow uncontrolled as we potentially head into an economic slowdown, when your sales will be weaker. Aim to be as cash-rich and financially nimble as possible. While product delivery times may lengthen, minimizing inventory can keep your company afloat if sales levels dip.


Proactively seek out multiple income sources. 7. Proactively seek out multiple income sources. Over-dependence on one or maybe several larger customers is a challenge for many of our clients. Big deals are great platforms for growth in the boom times, but think the unthinkable and picture what happens if one of these large clients moves on. Now is the perfect time to stress-test your balance sheet. How would your enterprise survive the sudden loss of say 50% of its revenue (or more)? You need to proactively look for new customers in diverse market sectors in order to soften the blow from market-wide shocks.
 

<span">Our aim with this newsletter is to make you think about the future, to remind you that no government has yet eliminated the business cycle. All booms are followed by busts and vice versa.  </span">
 
 
Call PBC today for a free consultation on this major business issue.
 
 
Click here to set up a 15-minute phone call with Bernie
 
 
 
 
Connect with us on social media and be part of the dialog.
Find us on Facebook View our LinkedIn Profile Follow us on Twitter View our latest RSS feeds Find us on YouTube Our Vimeo Channel Join our MeetUp
Sign up for our Business Tips Newsletter
 
 

This originally appeared in our July 2017 Newsletter.

 
 

Join Our Meetup

Join My Meetup
South Shore Professional Roundtable

Sign up for our Email Newsletter

SIGN UP NOW

Network With Us

Find us on Facebook View our LinkedIn Page Follow me on Twitter Find us on YouTube  Our Vimeo Channel

Start your own Constant Contact Email Campaign here:

Sign up for Constant Contact