The recession will be a steep learning curve for novice bosses. Here are 10 ‘don’t panic’ tips
Most business owners under the age of 40 have not worked through a deep recession and may not fully appreciate the hardship involved, says Mike Bowman, head of More Than Business, the insurance consultancy for small businesses.
Bowman says young entrepreneurs need to formulate plans to protect their businesses, and here offers simple tips to help negotiate the economic downturn.
1 Increase your cashflow
Bill early and bill often. Set up automatic late payment reminders. Send out payments as soon as the project is completed. Track your time to ensure you are fairly compensated.
2 Charge an upfront retainer fee to ensure you get paid
Requesting a retainer fee upfront provides a cushion while you are working on another job.
3 Reduce power bills
Consider heating and electricity alternatives. Carry out an energy audit to assess your utility provider. Turn off lights at night.
4 Look at your phone/ internet plan. Can you do better?
There are dozens of phone plans available, some offering significant discounts and off-peak savings. Carry out an audit of phone and internet usage and find out what plan best fits your business needs.
5 Review your prices
When was the last time you increased your prices? With inflation rising, it is essential to ensure that increased costs are factored into your goods and services.
7 Review your business location
Could you find a cheaper or more efficient location? Moving could save thousands of pounds in rent. The parlous property market may also open up attractive deals.
8 Review transport costs
Is it time to trade in your old van for a more fuel-efficient model? Do you need to visit clients or could you set up a phone conference or have them visit you? Use public transport.
9 Review marketing and advertising strategy
Could you better reach your customer base by e-mail rather than mail drop? Does that classified ad in the local paper need to be full colour?
10 Seek free advice
The Federation of Small Businesses has set up a finance helpline for members who are struggling. The free number is 08000 193 633.
Business Failure Rate Accelerating
There were 16,591 business failures in the first nine months of 2008, a 22% rise on the same period in 2007, according to the latest UK insolvency data from Experian.
In the three months to 30 September, 5,957 businesses failed – a 28.2% increase on the 2007 figure.
Tony Pullen, managing director of Experian’s business information division, said: “Our analysis highlights that businesses need to know who they are dealing with and that their customers and suppliers have the means to pay. The best approach is to monitor continually customers’ and suppliers’ commercial integrity against financial performance, credit risk information and payment behaviours.”
Sharper Focus For SME support
The Forum of Private Business has welcomed government plans to simplify the support it offers to small businesses.
Under the Solutions for Business initiative, the number of help schemes is being streamlined from more than 3000 to fewer than 100.
Solutions for Business will initially focus on training, grants, international trade, international markets and direct foreign investments. The new products, developed after consultation with the forum and other small business organisations, will be launched by March.
The forum called on ministers to follow up the move by reducing regulation and pressuring banks not to restrict lending to small firms.
Euro Bank offers £4bn funding aid
Alistair Darling, the chancellor, has announced that small and medium-sized businesses will benefit from up to £4 billion of lending from the European Investment Bank (EIB) up till 2012.
Several UK institutions already take EIB loans to support their small business clients.
They have now committed to discussing with the EIB the potential to draw additional loans. Other institutions supporting SMEs that have not worked with the EIB previously have committed to discussing working together and, where they are commercially competitive, use EIB loans to deliver the most effective support to small firms with sound business proposals.
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