You Don’t Have to Be Warren Buffet to Make Your Business Thrive!
Discipline and attention to details is more important than ever if you want to succeed in challenging economic times. Take a look around… competitors are closing their doors – which means more potential customers for the businesses that DO survive. And in times like these, it’s going to take more than “thinking outside the box” and goodwill with existing customers to secure the survival of your business.
You may have been lucky over the past few years – you may have found it possible to operate without a detailed, written plan and systems/processes. But the global economic crisis has changed all of that. If you want to thrive, there is only one thing that is for sure – uncertain times call for deliberate decisions and proven practices.
So here are & top tactics to recession-proof your business.
1. Begin with the end in mind
If you don’t know exactly where you are going, how will you know when you get there? Now is the second best time to decide on your strategy, set your goals and document tactics and timelines. Keep it simple – write a 2-3 page summary of what you intend to accomplish in 3 months, 6 months and 12 months.
2. Focus on cash flow not profit
You cannot buy a house or a new car with “profit” from your business. Make it your mission this year to develop and maintain a weekly/monthly cash flow forecast for your business. This is not hard to do but it does require discipline and a simple excel spreadsheet. If you need help, I recommend that you consider signing up for a free 14 day trial of Imagineering Profit. With just a few numbers from your Balance Sheet and Profit and Loss statement, Imagineering Profit can calculate your cash flow for you and give you the insight that you need to get your company operating in the black!
3. Collect your debt NOW!
How many days does it take to collect your debts on average? Whatever it is, make it your goals to reduce this by at least 10 days. You may be surprised to know that if your annual revenue is around $500,000, you could save yourself up to $2,500 in interest carrying charges simply by collecting your debts 10 days quicker on average. Pay attention to customers who are taking longer than usual to pay. Now is not the time to be extending too much credit if you are concerned about their ability to pay.
4. Rank your customers
Do you know who your best and worse customers are? Have you ever tried to calculate how much profit you are making from each customer or group of customers? If you don’t know the answers to these questions, today is the best time to start tracking and measuring this.
5. Fire your worst customers
Everyone knows that is cheaper and easier to garner incremental business from existing customers. Some even argue that it is 6 times cheaper and 75% easier to convert a sale from someone who already knows and trusts you. If you have unprofitable customers, get rid of them and focus your attention on your best customers.
6. Trim your product range
Contrary to popular belief, it is better to have money in your back pocket than tied up in stock sitting on your shelves for months on end. The longer it sits and does not turn over, the more it actually costs you in lost opportunities. Spend 2 hours today calculating which of your SKUs or stock lines are your worst performers; make it a priority to sell those quickly to release some much needed cash. Consider reducing your overall investment in stock. Compile a spreadsheet of all the SKUs you carry and then run two separate columns – one for how many units you sell on average of each per month and the other being the total units on hand. If your stock gets delivered quickly, you should never be carrying more than one month’s worth of sales at any given time.
7. Monitor your breakeven and key numbers
The most important day of the month is the day that you break even and start making a profit. If you don’t know which day of the month that is, you need to find out today. Knowing this number allows you to monitor your performance and take measures to correct issues right now. Waiting until the end of the year for your accountant to produce financial statements is not a good idea – if you are behind, you need to know now so that you can correct the situation.
By Car Enthusiast 02 Jun 2011
So, the Bank of England not only survives the financial crisis without any blame but it’s to be given enhanced powers. Is this justification for expecting it to be able to save us from what’s being labeled ‘inflation’ but is really just plain old ‘price rises’? The BofE can’t keep on top of events clearly within its remit, let alone those clearly outside it.
By Edward C. Prescott 05 Jun 2011
When privately-owned banks create money as ‘loans’, the profits (interest and seignorage) go back to them. If we had more public banks, we could bank with them, get our ‘loans’ from them too, and the profits would go back to the owners as before except that this time, it being a public bank, it’s us! Every time we took out a bank ‘loan’, we the community would be the ones to profit, not private bankers! So, then let’s bring on the publicly owned banks, right? Wrong! Northern Rock, the only entirely publicly-owned bank we have in the country, is being sold by the government, the one supposed to act in the best interests of the electorate, back to the banking community that ruined it in the first place! This is an appalling misjudgement.
By Frances Garfalco 06 Jun 2011
So true. I need to put my prices up – it is getting ridiculous. I haven’t done that in over 2 years. In business, it’s about moving onwards and upwards. Thanks for giving me some confidence and motivation.
By Carole Dunn 06 Jun 2011
We really need some new freelance writers. After reviewing your site, would you be open to making reguarl monthly contributions on finance?
By Art Neighbors 11 Jun 2011
Any chance you might do a follow up and explore some more contemporary entrepreneurs like Richard Branson – be good to read your thoughts on tips we can use to emulate a younger, hipper brand. Thanks!
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By karen millen 21 Jun 2011
This guy is really lucky !
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