Making sure you understand the best way to manage a business is even more important when negative factors that are not in your control are affecting it. More small and medium-sized businesses are pessimistic about the future than positive for the first time in four years, according to the Federation of Small Businesses (FSB). Small business‘ concerns are growing that the domestic economy will weaken. The first survey by the FSB since the Brexit vote suggests the second largest fall in confidence in the index’s history.
It is the third quarter in a row that confidence has fallen. “The political shock of the Brexit result has taken place at a time of weakening business confidence,” said FSB national chairman Mike Cherry. The FSB surveyed 1,035 small firms between July and August. The results suggested business confidence fell into negative territory for the first time since 2012, with pessimistic business owners outnumbering confident ones.
Brexit will be a challenge for UK small owners, the full impact may not be known for 2 years. Here are some tips to help you manage your business in uncertain times.
1. Plan & Measure Performance
Set expectations for your business over the next year in a budget and track financial and non-financial metrics to ensure you keep control of all business functions. Ensure all employees know what the targets are and understand the importance of their role in achieving it.
Review performance against budget monthly and update your current expectations in a forecast. Perform monthly Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis and start an action plan to capitalise on your strengths and opportunities and reduce your risks and weaknesses.
2. Control & Plan Cash-flow
Ensuring working capital is as high as possible should be a priority for all businesses.
Ensure you perform at least weekly bank reconciliation and cash flow forecast to ensure you understand all of your current and expected costs.
Run and review weekly an aged debtors report and ensure you are actively pursuing all outstanding debts.
Change your payment terms where possible to ensure the cash is deposited into your account as quickly as possible, offer a discount as an incentive or consider using a factoring company.
All new customers should be credit checked.
3. Try and reduce costs
In uncertain economic conditions, it is essential for businesses to continually review their cost base and try to reduce costs where possible.
Staffing and building costs are usually the largest, but it can take a long time find cost savings. To make immediate savings start analysing temporary staff, travel, utilities, marketing, telephony and technology costs.
Review all contracted costs such as insurance and shop around for the best deals.
4. Improve efficiency (Get more from less)
To remain as competitive and cost efficient as possible continually review processes and practice. Try to reduce waste from processes by identifying what your customers find valuable. Remove steps in your processes that do not deliver value.
5. Seek New Markets & Channels To Grow
Trying to increase revenue is essential for business sustainability. Due to a lack of funding, many small businesses fail to execute growth plans. Improving cash flow forecasting and reducing costs can allow businesses to undertake their growth plans without seeking outside funding.
Growing your business doesn’t need to be an expensive, growth can be achieved by improving marketing campaigns or sales win percentage. It is important to analyse what your business can do better to increase sales first.
Secondly, find out what your existing customers like about your products/services and develop new products from existing products based on their feedback.
Thirdly, try and find new markets for existing products/services. Research whether your product/service is needed by a different demographic, sector or region or country.
6. Retain Customer Loyalty
Existing customers spend more than new customers, and customer retention costs are much cheaper than new customer acquisition costs. Despite this, marketing budgets focus on new customer acquisition.
Offer your existing customers incentives for their loyalty and/or recommending your business to others.
Getting your customers to look and talk about your products is strategically just as important as traditional advertising.
Make Your Business A Success
The key to a successful business can be found in our Business Success Formula. If you structure your business using the Business Success Formula as your blueprint you will decrease your chance of failure significantly.
We assess your business and implement our business success formula in our business assessment service The Business 360. It provides you with all the information to 10x your business in a matter of weeks. You can check it out here.