We're heading into stormy financial waters.
If you haven't already completed these defensive actions (below) in your business, here are a few you may want to attend to. Soon. Like yesterday!
Debtors:
Pull them in. Customers who don't pay you aren't any good to you.
Manage this carefully, as you certainly don't want to chase good customers away just because you've "taught" them to be slow payers.
Stock/ Inventory:
Slow moving lines - Identify & reduce the stock. Be ruthless. Now is the time to convert stock to cash, not to "hope like hell" that you'll be able to sell it in 6 months time for an extra 10%.
Dead lines - Identify lines that should be discontinued, liquidate them and DON'T re-purchase.
Minimum & Max Stock levels - Recalculate these to take account of slower trading conditions.
If you're an importer, consider a bonded warehouse (if applicable).
If you purchase locally - consider purchasing less & more often (caution: don't drive your costs).
Work In Progress:
Assess work flow, systems, timing - Reduce WIP
Creditors:
Who are you paying too quickly? What's the rush?
Customers:
Analyse which ones are driving your costs. You may need to instigate strict "minimum purchase" amounts. Caution: Exercise judgment - don't burn good customers who generally purchase reasonable amounts just because they occasionally "under buy".
Administration Costs:
Pay Creditors once a month only (if possible).
Try paying staff fortnightly instead of weekly (Consultation necessary)
Shrinkage/ Theft
Check current systems to ensure that there are no obvious "holes".
This applies to both internal & external theft.
Don't be "foolish" enough to think "its not happening to me".
Productivity:
Ensure that you're monitoring productivity. If you don't have a system in place, you should consider instituting a simple system. These systems do NOT have to be complex or expensive to institute.
Major costs such as the ratios of Labour : Output AND Key material items : Output should be measured. Where necessary, this may have to be done daily (or more often depending on the circumstances).
Again - this does NOT have to be a "science project". Simple systems can be sufficient to "raise the red warning flag" on key items. Don't try measure everything all the time. KEY items!
Utilities etc:
Check that they're only used when necessary. (Focus on the things that count. Don't bother yourself or your staff with "petty stuff".
Quality of life items:
Be careful not to become too "picky" over stuff that creates a nice workplace, and that really won't make any difference to the business. Don't go buying crappy coffee to save a few bucks.
Personnel:
Remember every person that works with you is essential to the business - treat them right. (If they are not essential, they should not be there. Its not fair to the business or to them).
Treat your staff fairly. They are essential to your businesses success. The business is (usually) as important to them as it is to you. If your requirements are reasonable, and if you explain why things need to be done/ changed, invariably people will understand & do it. Changes that need to be made must be managed - resistance to change is NOT a given.
Yes, occasionally you may have to remind people! Be patient. Be persistent. Be wise.
The good times will be coming just around the corner. A lean & motivated business will; do even better when next they come around!
Michael Marcus - The Franchisees & Independent Business' Advocate Group
Helping franchisees and independent businesses achieve their goals quickly and inexpensively.
The Franchisees Advocate Group - Australia
If you haven't already completed these defensive actions (below) in your business, here are a few you may want to attend to. Soon. Like yesterday!
Debtors:
Pull them in. Customers who don't pay you aren't any good to you.
Manage this carefully, as you certainly don't want to chase good customers away just because you've "taught" them to be slow payers.
Stock/ Inventory:
Slow moving lines - Identify & reduce the stock. Be ruthless. Now is the time to convert stock to cash, not to "hope like hell" that you'll be able to sell it in 6 months time for an extra 10%.
Dead lines - Identify lines that should be discontinued, liquidate them and DON'T re-purchase.
Minimum & Max Stock levels - Recalculate these to take account of slower trading conditions.
If you're an importer, consider a bonded warehouse (if applicable).
If you purchase locally - consider purchasing less & more often (caution: don't drive your costs).
Work In Progress:
Assess work flow, systems, timing - Reduce WIP
Creditors:
Who are you paying too quickly? What's the rush?
Customers:
Analyse which ones are driving your costs. You may need to instigate strict "minimum purchase" amounts. Caution: Exercise judgment - don't burn good customers who generally purchase reasonable amounts just because they occasionally "under buy".
Administration Costs:
Pay Creditors once a month only (if possible).
Try paying staff fortnightly instead of weekly (Consultation necessary)
Shrinkage/ Theft
Check current systems to ensure that there are no obvious "holes".
This applies to both internal & external theft.
Don't be "foolish" enough to think "its not happening to me".
Productivity:
Ensure that you're monitoring productivity. If you don't have a system in place, you should consider instituting a simple system. These systems do NOT have to be complex or expensive to institute.
Major costs such as the ratios of Labour : Output AND Key material items : Output should be measured. Where necessary, this may have to be done daily (or more often depending on the circumstances).
Again - this does NOT have to be a "science project". Simple systems can be sufficient to "raise the red warning flag" on key items. Don't try measure everything all the time. KEY items!
Utilities etc:
Check that they're only used when necessary. (Focus on the things that count. Don't bother yourself or your staff with "petty stuff".
Quality of life items:
Be careful not to become too "picky" over stuff that creates a nice workplace, and that really won't make any difference to the business. Don't go buying crappy coffee to save a few bucks.
Personnel:
Remember every person that works with you is essential to the business - treat them right. (If they are not essential, they should not be there. Its not fair to the business or to them).
Treat your staff fairly. They are essential to your businesses success. The business is (usually) as important to them as it is to you. If your requirements are reasonable, and if you explain why things need to be done/ changed, invariably people will understand & do it. Changes that need to be made must be managed - resistance to change is NOT a given.
Yes, occasionally you may have to remind people! Be patient. Be persistent. Be wise.
The good times will be coming just around the corner. A lean & motivated business will; do even better when next they come around!
Michael Marcus - The Franchisees & Independent Business' Advocate Group
Helping franchisees and independent businesses achieve their goals quickly and inexpensively.
The Franchisees Advocate Group - Australia
