Many small businesses will face a bumpy ride at some point. If you ever find yourself in this position, here are a few things to keep in mind to help weather the storm.
With the Bank of England expected to raise interest rates, businesses should be prepared. When they do increase, costs will rise, too. Businesses must keep an eye out for the best time to fix their rates at an affordable level, so they are not caught out.
The current environment means currency rates are hard to predict. Businesses importing or exporting need to reduce their exposure to this risk. When taking or placing orders at one rate, an unexpected move to another could seriously harm profitability. Find out how you can fix your rate to cut risk.
As insolvencies rise, so do the risks associated with your customers. We recommend running credit checks on your customers, reducing payment terms, or breaking up larger payments. Additionally, think of taking our credit insurance. It can be expensive taking out credit insurance on customers, but if a firm you do business with gets into trouble, at least you will be cover.
Businesses that emerge from bumpy waters in the strongest shape relied less on layoffs to cut costs and leaned more on operational improvements.
That’s because layoffs aren’t just harmful to workers; they’re costly for businesses, too. Hiring and training are expensive, so businesses prefer not to have to rehire when business picks back up. Layoffs can also hurt morale, dampening productivity at a time when businesses can’t afford it. Fortunately, layoffs aren’t the only way to cut costs. Businesses should consider hour reductions, furloughs, and performance pay.
The key to getting through uncertain times is to ensure your business is flexible for future downturns. Make sure your overheads are as low as possible. For example, look at flexible office space instead of being tied into leases.
Make sure there’s ready cash available in the business. Either take less out or consider other ways to finance – such as factoring or invoice discounting. Additionally look at your aged debtors and put a plan in place to ensure you chase these and get the payments in.
Every business collects financial data in some form or other, but that doesn’t mean it has the financial information it actually needs. During this time, it’s integral you have real-time data that lets you know how well you are currently performing and you can make the decisions necessary to get you back on track.