As featured in the December edition of the British Business Angels Association newsletter:
Nick Winters, Partner at Vantis, the AIM listed UK accounting, tax and business advisory group, looks at what local businesses can be doing to help survive the economic downturn.
The effects of the credit crunch are now being felt well beyond the confines of the City. Many businesses may be feeling the effects and wondering what to do.
Timing is everything. Taking action early is the key to protecting a business before the situation worsens. There are also various options available for businesses who find themselves in difficulty. There may even be unseen opportunities.
Most businesses encounter problems at some stage, despite being well managed. Many of the problems are not of their own making. Successful business turnaround is usually achieved as a result of management confronting and identifying their difficulties at an early stage and seeking quality specialist help.
The current situation is forcing most businesses to consider their next actions carefully. Here, Nick Winters looks at what businesses could be doing to help survive the downturn, and even emerge from it in a better position, ready to take on new challenges;
Top ten tips to surviving the credit crunch:
- Firstly - make the time to consider your situation properly.
- Carefully review your business plan. If you haven’t got one, create one now, and stick to it as much as possible.
- Set short-term objectives for, say, three-monthly intervals and keep them under review.
- Review all expenditure and consider what is really necessary. Can any costs be cut or deferred?
- Are there any costs which could be deemed an ‘investment’ and if so, consider increasing the expenditure. For example, some marketing expenditure may need to be increased rather than cut.
- Review and improve business processes and put new processes in place where necessary. This will improve efficiencies and will drive down costs. If it doesn't, the process is faulty and needs to be reviewed.
- Calculate any extra working capital requirement and negotiate with your bank, and perhaps your key creditors, before it is needed.
- Review the whole process of how you deal with your customers. How can you accelerate payments from them? You may want to consider discounts, but beware of granting a reduction to anyone who doesn’t actually ask for one!
- Consider incentivising your team with non-cash rewards. Perhaps there is an opportunity for senior key employees to be offered share options, or would tailored incentives such as holidays or meals out be more of a motivator?
- Check with an adviser whether your business can reduce any tax liabilities, and whether you are extracting your own “remuneration” from your business as tax efficiently as possible.
Finally, as a result of the above, list all the opportunities that you can envisage in these difficult market conditions. Competitors may be falling by the wayside, key individuals may be unhappy with their current opportunities, potential new customers may be looking to change their suppliers - how can you best capitalise on any of these scenarios?
Most of this may well be common sense, but unless it is translated into action, it is of no benefit to you or your business. Vantis’ widely experienced Business Recovery Services team has been able to help save many businesses in difficulty, by guiding them through the various options available and providing specialist advice on the most effective course of action.
To find out more about how Vantis can help you and your business, please contact Nick Winters of Vantis on Tel 020 7467 4000 or via email Nick Winters