WITH all thoughts of Christmas now consigned to the back of a cupboard along with the company decorations, talk has turned to actioning business resolutions for 2007. Unlike losing weight and taking more exercise, these are plans for the New Year which exist to be kept.
The next 12 months could well be tough for many organisations, which is why I have pulled together the following top ten tips for keeping a business profitable. These are based on years of experience advising owner managers and corporate clients on protecting and growing their businesses.
1 Plan ahead beyond the day-to-day running of the business. There must be a clear understanding of where the business is going and what needs to be achieved if it is to have any chance of success.
Ensure everybody in the business understands the plan and their part in it.
2 Have a clear understanding of how the business is performing and monitor this regularly against expectations. Prepare monthly management accounts and compare this against forecasts.
It is crucial to understand what has happened and why. Record and take the appropriate corrective action to get the business back on track.
3 Monitor and manage the cash position and remember that â€˜cash is kingâ€™. Always leave some headroom as things hardly ever progress as expected. If necessary, prepare weekly or even daily cash flows.
4 Focus on your customer requirements with good research and adapt your products and services to meet these needs.
Manage the sale process. Donâ€™t â€˜buyâ€™ sales – you must have a reasonable return. Once the sale is made, invoice customers as soon as possible and maintain tight credit control.
5 Review all costs and overheads. Ask yourself whether this is the best value and whether you really need each cost. Continue to control them carefully and ruthlessly.
6 Build a team that is compatible with each other and with the strategy and objectives of the business. The team should have complementary skills to finance, produce, sell and market. The key here is getting everyone to buy into what needs to be achieved.
7 Take preventative measures against legal and contract disputes. Review, for example, your terms of business both with your customers and suppliers.
Take advice on the adequacy of your retention of title clauses. Understand how and when to enforce this.
If things become more difficult:
8 Donâ€™t panic. It is crucial to act quickly as avoiding action can make things worse. The ostrich approach absolutely will not work and could well end up costing you more than you think.
9 Most creditors will be sympathetic to your position if you keep them advised as to your plans. Establishing a recovery plan may require some very tough decisions but this may be easier than the alternative.
10 Ultimately, work with professionals who understand your situation, have the relevant experience and can offer you the appropriate help with assessing the options.
Graham Bushby can be contacted at Baker Tillyâ€™s Milton Keynes office on 01908 687800 or by e-mail at firstname.lastname@example.org
For more information, visit www.bakertilly.co.uk“