Irrespective on the type or size of your business, surviving an economic recession will be challenging to most. Anytime the cash flow in a business, large or small, starts to tighten up, cash flow management become crucial as you will need to run a “tight ship” to emerge fairly unscathed.
Some of the things you can and should do is to protect the business from impulsive buying. We've all bought merchandise or services we really didn't need simply because we were in the mood, or perhaps in response to the flamboyancy of the advertising or the persuasiveness of the salesperson. Then we sort of "wake up" a couple of days later and find that we've committed hundreds of Rands of business funds for an item or service that's not essential to the success of the business, when really pressing items had been waiting for those Rands.
If your business is a sizeable business in terms of the number of staff and you havent put a expenditure authorising policy in place, it will be a good idea to do so. Tie up your authority policy you’re your budget. Document the expenditure levels and who may authorise these expenditures for both budgeted and unbudgeted items. If you have such a document in place it may be time to revise the levels downwards, thereby tighten up the business expenditure. You may state that all unbudgeted items needs to be approved by the business owners and/or directors. This will force you to consider any "impulse purchases", and may even be a reminder in the case of smaller purchases.
While you may think you cannot afford it, be sure that you don't "short-change" yourself on professional services. This would apply especially during a time of emergency. Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you're skating on thin ice. Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you.
When sales are down, you must be "hard-nosed" with people trying to sell you luxuries for your business. When business is booming, you undoubtedly will allow sales people to show you new models of equipment or a new line of supplies; but when your business is down, skip the entertaining frills and concentrate on the basics. Great care must be taken however, to maintain courtesy and allow these sellers to consider you a friend and call back at another time.
Your company's books should reflect your way of thinking, and whoever maintains them should generate information according to your policies. Tighten up the credit line that you extend to your clients. To keep your clients current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they're falling behind. if you develop such a habit as part of your operating procedure, you'll find your invoices will magically be drawn to the front of their piles of bills to pay. While maintaining a courteous attitude, don't hesitant, or too much of a "nice guy" when it comes to collecting money.
By all means, join your industry's local and national trade associations. Most of these organisations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends. If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall. Customers like to see such "seals of approval" and feel additional confidence in your business when they see them.
The important thing about running a small business is to know the direction in which you're heading; to know on a day-to-day basis your progress in that very direction; to be aware of what your competitors are doing and to practice good money management at all times. All this will prepare you to recognise potential problems before they arise.
In order to survive with a small business, regardless of the economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.
