With the fun and games on the stock market, falling house prices and panicking housebuilders, people are starting to mention the ‘R’ word (that’s recession for those of you too young to remember the early 90s).

A survey by accountancy firm Tenon of 89 entrepreneurs running SMEs in the construction sector showed that 54% of them did not have any plans in place to address business risk.

Tenon, which specialises in small businesses, offers this advice on weathering the economic storm to those running their own businesses:

  • However positive things are, have a Plan B in case the business is hit by something unexpected;
  • Act, don’t wait for things to get bad before putting plans in place;
  • Cash is king: have the best cash management approach – it’s simple and is the most important part of the business;
  • Know where things are: make sure financial records are robust and up to date;
  • Have the best possible relationship with the bank – it’s essential they are fully aware of the business’s financial situation;
  • Take a new approach to tax – question what can be done to improve tax cash flow and ease payments and consult an adviser;
  • Even if demand is slow, always be in control of costs: know which are variable, can be acted on and how;
  • Rehearse the most difficult conversations that may need to be had with suppliers, clients, customers, employees and financiers should the worst happen;
  • Check employment terms and recognise who are the essential members of the team;
  • Price properly – don’t over-react to market conditions, understand whether demand is price sensitive and don’t give profits away.

Source

Construction Manager