Cashflow Tips To Navigate In Uncertain Times

Accountant Gives North Shore Business Owners
Cashflow Tips To Navigate In Uncertain Times Post South Canterbury Finance (SCF) Bailout
Following an historic move by the Government to bailout the stricken SFC finance company, the best thing business owners can do to prepare for further uncertainties is use the short-term bubble in economic recovery to get their cashflow under control, advises a local accountant.

Butch Mawdsley, of RES Group and its specialist business growth division 10X North Shore says he has had many small business clients asking for advice on how to plan for the future, in the wake of the recent uncertainty surround the economic downturn.

“Understandably, many business owners are worried about whether the current reserve bank initiatives will be good or bad for small business,” Butch says. “While any new measures will have to be well debated and thought out, which would result in a period of relative instability, in the event of indications of further global economic downturn, there are concerns that any recovery or bailout packages will only cause more long term pain without any gain”!

Instead, Butch recommends North Shore businesses ideally look to their trusted advisors for guidance on how to go about safeguarding their business against all eventualities. However, many SMEs don’t currently have the most proactive support team, says Butch so he has put together a selection of tips to help small business owners get back in the black.

Butch’s number one tip for navigating uncertain times? “Manage your cashflow - scrupulously!” he says. “It would be very wise to get into a cashflow positive situation, while we wait to see what will transpose. If you adopt a “head in the sand” approach you must remember that your butt is exposed and it won’t be too long before someone comes from behind and gives it a kick! Don’t Procrastinate, Act Now!

To address their cashflow, there are many areas in which a business owner can make little changes that cumulatively, will have a profound impact on a business’ ability to weather economic ups and downs. Below is Butch’s recommendations for 30 simple steps that will put SME owners on a path to a healthier position.

1. Cut costs wherever possible:

1. Set monthly expenditure budgets
2. Don’t allow your team to buy office supplies/commission work without authorisation
3. Keep overheads to a minimum
4. Have a non-spending month
5. If you do have to spend: Get three quotes, keep records of the prices and check all invoices against the prices quoted
6. Negotiate fixed, not variable expenses
7. Reduce any unnecessary management
8. Re-finance
9. Reduce/eliminate taxation expenses – e.g. Rent for maximum tax write off
10. Meet with your accountant monthly and change accountants if they can’t assist you with other ways to reduce your costs.

2. Increase your client retention rate:

1. Understand customer loyalty motivations
2. Keep good data on clients (record buying habits/special requirements in your database)
3. Ask your customers about their future needs
4. Follow up and follow up again after enquiries or quotes that have been issued etc.
5. Create a WOW atmosphere that has customers promoting your business for free, via word of mouth
6. Give team incentives for repeat sales
7. Create a membership club / VIP card
8. Put customers onto contracts if possible
9. Offer free trials of your product/service
10. Give customers an offer to use on their next purchase.

3. Generate new leads:

1. Identify your target market and then work to understand your prospects
2. Be active in your public relations
3. Leverage your online presence (website/social media websites) to encourage visitors to refer friends
4. E-mail marketing
5. SMS promotions such as texting clients an offer coupon
6. Offer free reports
7. Create inserts that accompany your invoices promoting your other products/services
8. Distribute letter box flyers
9. Have point of purchase or in-store promotions/competitions
10. Hold events like workshops, seminars or demonstration days.

Finally, says Butch, “Ask yourself, is your accountant proactive in giving you advice on ways you could be growing your business to safeguard against the effects of potential economic reform, or indeed a lack thereof? Have they talked you through what you can be doing to improve your position in the meantime, while we await the result of the SCF bailout” he adds. If not, it might be time to look for help elsewhere.
“It’s imperative your accountant is proactive, not just at times you expect, like tax time or at times of political uncertainty or change, but also all year round,” says Butch “You can’t afford to have an accountant that is simply reporting on your figures – they should be actively involved in helping your business grow,” he explains. “Hence, it’s critical that business owners consult with their accountant now and put into place a business growth strategy for 2011 that takes into account all possible outcomes of the recent Government bailout of the magnitude required for this failed finance company”.
ENDS

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