Turning around your business
As many small business owners know, this is a difficult time for businesses and there are many small failing every day with over 32,000 expected to fail in 2009 .
If you run your own business it is essential that you realise that there is always a risk that your business may fail and it is important that you act now to reduce this risk while you still can. This will mean that you can turn around your business and at least keep it secure and profitable even if you cannot grow it in this economic climate.
Admit that there is a problem
It is not easy for a business owner that has taken many years to grow their business to admit that there is a problem and that the business is in trouble. After all, the business is like your child and which parent can say that they child is going wrong? The author knows that it is very easy to bury your head in the sand in the hopes that it will all go away but the first step in turning around your business is to admit that there is a problem.
As a business owner you have a vested interest in the business, after all you have invested time and money into it, and turning your business around should be at the top of your list of priorities.
Some of the things you will need to do will take time (for example cutting costs, talking to suppliers to try and get better terms or rates, diversifying into other business areas or even making staff redundant) so it is important to take action as soon as you have decided what needs doing. However you should not should rush into things and take actions that you have not thought about fully. You have probably spent many years building your business up so a few days of careful consideration is called for, a good way of doing this it to take a few days away from the business, either at home or go away for a couple fo days and sit down to think about the options and the pros and cons of each.
Some of the options that may be available to you include:-
Increasing your profit ??? if you are losing money on a deal why carry on with it, a deal worth ??100,000 is no use to your business if your costs for that deal are ??110,000 and you are losing ??10,000 on it - how many such deals would you need before you ran out of money? Concentrate on the deals where you are making money and your profit will increase (of course as a good business owner you do know which deals these are don't you?).
Make sure that you credit check each client if appropriate, there is no point in getting a new customer if they are about to go under without paying you. This happens more often than many people realise ad is a reason for many business failures, someone further up the chain has collapsed and this works it's way down the chain until the small businesses at the bottom are hit - think of Woolworths for example, their failure also brought down other shops as they relied on Woolworths to supply them with DVDs and other items.
Better credit control - Chase customers for quicker payment of their debts to you. If payment terms are 30 days start asking for confirmation that the payment will be made after 20 days, try not to let the debt go past the due date ??? you are effectively lending your customers money (on a zero percent interest rate) when they buy on credit from you so why let them borrow it for longer than they need to, especially if you are paying interest on an overdraft or loan to finance the deal? If you need to, consider using professional business debt recovery, don't just sit back and think that people will pay you - many will not, and will take advantage of the fact that you are not asking for payment to keep the money in their bank account.
Keep control of costs, even down to small items ??? for example, it may be nice to have a selection of the best brands of filter coffee for staff and visitors to drink but why not save money and buy supermarket own brand instant coffee (you may want to buy filter coffee for those special meetings but the author finds that most meetings go just as well with instant). This works across the board, look at everything you purchase and ask if there is a cheaper option that will work just as well, for example do you need good quality paper for internal memos or will normal 80gsm paper work just as well.
Other cost savings might be, do you need to travel to see the client or will a phone call do just as well? If you have to travel would it be cheaper by train than by car (of course you need to factor in taxi's at each end and the time it takes to travel by train - although it is possible to work on a train).
Talk to your accountant about tax savings or grants that may be available to you (if your accountant does not know then talk to your local business link organisation or business consultant), if you do not have an accountant, or you are unhappy with your current accountant (maybe he is costing too much or you don't feel that they are working for you), find a local accountant by using the internet or talking to friends or other businesses in the local area.
Talk to a business recovery specialist, there are many of these around the UK and they specialise in helping businesses that are in trouble. One such company is Hart Shaw???s Business Recovery & Insolvency, their team have been helping business to recover from their financial problems for over 20 years. They offer independent unbiased advice and will work closely with you to develop a practical solution to your business???s problems, whether it is through a formal insolvency procedure or by way of an informal restructuring.
Remember that to turn your business around successfully will take time and effort and may involve some heartache (especially if you have to make staff redunant) but the longer you leave it the higher the risk that you may well not be able to rescue your business in time and that will affect everyone that you employ including yourself.