Planning for tough times

08/06/2010

Yesterday Angela Merkel, the German Chancellor, announced €80bn (£66bn) of savings between now and 2014. At the same time, David Cameron announced a £156bn deficit. Things are going to get tough! The question is: if you are running a small business how are you going to deal with this and have you even thought about it?

If you are dealing with the public sector it will affect you; but even if you aren’t, this is going to affect all of us. I suggest you start planning and acting now, before you get caught out and have to do anything in a rush. Here are some ideas to give you a start:

Use the 80/20 rule. If 80% of your business comes from the public sector, try and find more customers in the private sector. Ideally, no more than 20% of your business should be with one sector or other business.
Keep the customers you already have – treat them like royalty: you’re going to need them.
Re the above, think about your marketing – special offers, loyalty discounts etc.
Look carefully at cost savings – utility bills, fuel bills, stationery usage etc.
Use your computer more: email is virtually free, office software can be had for free. Don’t forget to back up regularly!
Be very careful before you part company with good staff; it can be a false economy as training new staff can be costly.
Make sure you put time aside for credit control – you must begin to chase late payers as soon as possible after the event and according to your contract with them.
Try and put aside some cash and build up a reserve to tide you over the worst times when work falls off and you still have to pay the tax man!

I have no doubt that you will think of others, but I hope this helps you to get started. Please don’t delay!

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