To say that it’s a tough business environment right now is an understatement. While many of us are trying to put food on the table, others simply have no income. Adaptability is key and we have to rethink how we operate our personal as well as business finances. New circumstances are creating a new normal for us. Some tips and pointers as to how to adapt and switch our thinking:
1. Plan inflows and outflows
You may no longer have the luxury of running your business month to month, assuming a positive cash flow. Budget for your expenses religiously and stick to it. Eliminate any unnecessary expenses that can wait. Only spend money on aspects that will increase your sales or that are crucial maintenance issues. Prioritise and plan for these expenses as part of your budget.
2. Sweat the small stuff
Scrutinise your expenses to see where you can reduce costs without impacting on your business. Look at areas such as subscriptions and contracts with your service providers such as data and internet use. Are there better deals available? What about banking costs – can you reduce these costs and switch to a cheaper package? If you don’t need a business banking package that comes with bells and whistles and a steep price tag, run your business from a far cheaper personal bank account. Look at your insurance costs – when last have you shopped around for quotes or do you just accept the premium increases every year? Examine each and every expense to see where you can some money. All the small savings can add up to something substantial at the end of the day
3. Invoice early
We often tend to send out invoices towards the last week of the month and this could result in delays where you are only paid the following month. Invoice as early as possible and follow up, to make sure that your money flowing happens sooner rather than later. Follow up on outstanding invoices – this is no time to be shy as your business cannot operate without funds.
4. Talk to your suppliers
If you are unable to pay your suppliers, talk to them. Again, this is no time to be shy, so try to come to a mutually acceptable arrangement. So many businesses are facing the same issues today, and arranging to pay off the amount in installments or paying it off later, is better than no income. You could also try to negotiate discount terms if you are able to pay in one full amount or within a certain time. Many businesses are battling and we need to speak to each other in these tough times.
5. Generate cash
Nothing ties up cash like excess stock sitting around gathering dust. Get rid of it and generate some income – offer a discount or run special promotions and boost your cash flow. Also if you have items such as machinery, equipment or even vehicles that that you no longer use, sell them. If you use them occasionally, consider renting them out to other businesses to generate some cash. You may also have excess storage space – rent this out. People are often looking for small secure storage areas.
6. Discounts for early payment
It may be a great incentive for your clients to pay earlier if you offer a discount on early payments. The bit of revenue that you lost through the discount may mean the difference between life and death when it comes to your business survival.
Tough times don’t last, tough people do, they say. We know that these difficult times will not last forever, but the trick is to be able to still be around once the fog lifts. A bit of change and a new way of thinking can pull one through and build business resilience – a skill that will stand one in good stead, no matter what the business climate looks like.