1. Shore Up Your Cash Position
Cash is king when a business are stressed. When the cash runs out that is when a business stops trading. But while you have cash in the bank, you can continue to trade.
One of the first things you should do is look closely at your cash situation and try to enhance the amount of cash flowing into the business and reduce the amount flowing out.
This could be through increased sales or through reduced expenditure, amongst other ways.
2. Reduce Or Eliminate Non-Essential Expenditure
Most businesses should be able to reduce some of their non-essential expenditure fairly easily. There is always something that can be cut out.
You should audit every expense and cost to quantify what money is leaving the business and trim, where you can.
If you don’t need something, your mantra should be don’t buy it or cancel it.
3. Look At Return On Essential Expenditure
For some expenditure, or what is considered to be essential expenditure, you should look at the return that you get for your money spent.
If the return is minimal or is not adding to progress the business, you should be savage and cut the expenditure out.
4. Look At High Essential Expenditure
Rent, rates, staff and energy costs could be your highest costs.
One possibility could be to talk to your landlord about a rent reduction or holiday. Another area where money can be saved is your staff costs. Could you reduce some working hours?
One other good place to look is energy costs; could you save on consumption or maybe negotiate new tariffs with your supplier?
5. Optimise Sales & Revenue
One obvious area of your business to consider is the revenue being generated by your sales. Could your sales be boosted?
This is the time to stop and to look closely at your sales, what products are selling and to see where you could make possible increases.
You should closely analyse your product sales in order to understand where quick gains could be made in sales.
6. Monitor Your Sales Daily
A good discipline is to keep a close eye on your sales, on a daily basis.
By close monitoring, you will understand better what is happening in your sales process and how to best make possible improvements.
Setting weekly or monthly targets for sales, accompanied with daily monitoring is a good way to focus on increasing sales.
7. Project & Forecast Future Cash Flow
One good practice is to forecast and project your cash flow for the future.
This should be done for the short-term, i.e. seven to fourteen days and for the medium term up to three months of so. By doing so, you could eliminate any shocks that may be coming your way.
By knowing that the week after next, for example, the cash flow is going to be tight, you can plan how you manage your cash flow better leading up to that point; maybe a quick boost of sales or holding back on a paying a large creditor by a few days, could help to make the situation better.
8. Focus On 20% Of Your Best Customers
For many businesses, 80% of sales can come from the top 20% of customers, approximately.
One effective way that sales can be increased quickly is to look at your best customers and to see how they could be persuaded to buy more from you. Your best customers are more likely to buy more from you, more frequently.
Maybe a quick talk with them could yield good results.
9. Focus On Selling Products With Highest Margins Or Highest Sales Probability
It is likely that you will sell more than one product with some products having higher selling margins than others. By increasing your margin, you are also increasing your net profit base.
A good way to boost profitability is to try to enhance the sales of the products with the highest margin.
Another way is to focus primarily on selling the best-selling products of your portfolio.
10. Improve Your Customer Experience
For most businesses, sales are very much dependent on the Customer Experience.
Generally, the better the experience, the more customers will buy from you and the greater, the number of new customers who will be attracted to your brand.
How good is your customer experience?
One good practice is to look at every customer contact point and appraise each for quality and assess whether, each could be improved.
Another good practice is to ask your customers their views and to ask them where improvements could be made. You could get some good insights, here.
11. Communicate Better With Your Customers
A good way to increase sales is to step up your communications with your best customers and build strong relationships with them.
Many businesses shy away from doing this, but it can be one of the most effective ways to boost sales. Good customer relationships will also help to prevent customers migrating to competitors.
Communication could be possible through better social media marketing, better email marketing or by just picking up the ‘phone and talking.
12. Optimise Margins & Gross Profit
Increasing your overall margins is something else, you should consider.
This could be by selling higher margin products (mentioned previously) or by reducing the costs of your products to make or procure.
If you procure products, you could ask your supplier for a discount or try to source the same or similar products from a cheaper source.
If you manufacture your own products, you should look at your raw material and production costs. Maybe you could ask your suppliers for a cost reduction or look at how you can save on energy or other costs of production?
Another route could be to increase your product selling prices or reduce discounts to customers.
13. Extend Credit Terms
Are you paying your creditors too early?
One way of saving cash flow is to ask to have your credit terms extended for purchases from your suppliers. If you are paying after 30 days, for instance, maybe ask for a further 7 day extension?
14. Reduce Debtors
If you have debtors owing you money, is the amount owed excessive or are the terms of payment too long?
You should look at the money you are owed and see how you can receive this a little quicker. Maybe talk to your customers and suggest cash on delivery or a shorter credit term in return for a small discount?
One route that you could offer significant benefit could be invoice factoring, whereby you sell your invoice debts to a third company. Such an operation could allow you to receive payment for goods sold, earlier than you would normally receive it.
15. Reduce Stock Levels
If you hold physical stock for resale, you should look to see if the levels of stock holding are excessive. Could you reduce the stock levels, for instance?
If so, that could save valuable cash flow.
16. Step Up Your Marketing
For many businesses, sales can be proportional to the volume of good marketing that is done. If you step up the marketing, you are very likely to see more sales, over time.
You should look at your marketing and scrutinise what is working and what is not working. It is pointless spending time and resources on marketing that does not work, instead you should focus on what works.
You should also look at fully utilising free social media marketing or email marketing before you pay for any paid marketing. When perform right, these free platforms can create highly effective results.
'Word of Mouth' is also something you should consider encouraging. By enhancing your customer experience (mentioned previously), 'word of mouth' should start to work better for your brand, too. Maybe also ask your best customers to refer your business to friends in return for a small gift?
17. Create Some Good Offers
Another area to look at is the creation of good offers to boost sales.
Such offers should be well thought-out and be well targeted to your customers to get the very best results.
But beware, only offers that substantially increase sales will be of good benefit in such situations. 30% increase in sales, say, will increase cash flow but could actually increase your costs substantially, with no net gain overall. Only offers that create large increases of sales, such as 100% or more will yield the greatest benefits and should be considered.
18. Win Awards For Your Business
Most industries have awards for the best but importantly, by winning awards, it adds credence to your brand and strengthens it. You should enter your business into as many awards as you can, and you should try to win as many of these, as possible.
By entering awards, it can change the mindset of the business owners and employees; the emphasis can switch to improving overall quality of the business and the products, in order to win awards.
19. Use Public Relations or PR
Local newspapers and local radio, along with other print or digital media, are always looking for news stories, making public relations a great way to increase awareness of your brand.
If you start selling a new product or you win an award for your business, for instance, these could be good news-worthy stories that the media will wish to publish.
20. Support A Local Charity
By supporting a worthy and popular local charity, you could not only do the charity some good, but you could do your business some good, too.
The media are always interested in fund-raising efforts by businesses, and this will almost certainly prove to be a good way to create awareness of your brand.
21. Improve Productivity
Productivity should always be monitored on a regular basis but when things are tough, you should look more closely at your methods and processes in order to see how changes and improvements could be made.
Remember, ‘Necessity is the mother of invention’
Every process should be broken down into small steps and each step should be evaluated to see where improvements are possible.
22. Improve The Quality Of Your Business
Generally, the higher the standards of quality running through a business, the greater the sales and the greater the profits.
How good is your quality?
Obviously, the products you sell need to be of a high quality, but what about everything else. From customer service and customer communications through to employee relations and your back office, everything needs to be of a high and excellent standard and quality.
Could you make improvements in quality in any part of your business?
A comprehensive quality analysis of your entire business could create some good insights into how improvements could be made.
23. Decrease Wastage
Most businesses are wasteful in one form or another and, for most, wastage can nearly always be reduced.
How wasteful is your business?
Do you waste product or is energy usage wasteful and excessive? Most businesses can save between 5% and 10%, generally, when closely analysed.
As part of a quality analysis of your business (mentioned above), wastage issues could be highlighted too.
Final Word
This is a quick summary of what can be done to alleviate stressed situations and all methods have been proven to work many times by many businesses.
For most businesses, sitting back and hoping the situation will improve is not a valid option.
Every business owner must be proactive and you must be the same if you find yourself in a tight situation.
By adopting some or all of these methods, described above, you should be able to rebuild your business, reasonably quickly.
Best of luck.
Robert
Please Contact Me, If You Have Any Comments Or Questions About This Blog Article. I Would Be Pleased To Help You.
Robert Viney Is An Award-Winning Business Coach
Top 20 Entrepreneur Coach 2022, Awarded By The Coach Foundation
