Is your business under pressure? It’s hardly surprising given the tough few years that we’ve had that, according to a recent report in The Daily Telegraph, a quarter of SMEs have insufficient funds to meet their short term debts. Perhaps, having been punished during the recession, you feel you’ve lost the energy, and don’t have the skills to put the business back on its feet.
Here’s a quick step by step guide to getting things back on track:
• Be brutally honest. There’s no point in burying your head in the sand and pretending that there’s no crisis. Moving numbers around the accounts solves nothing, and don’t kid yourself that there’s some huge new profitable contract coming in next week. Ditch the false optimism and face reality.
• Understand your cash flow. It’s vital that you understand when your cash is coming in and when it’s going out. Make sure you have a carefully prepared cash flow forecast for at least the next three months, prepared on a weekly basis, and keep it up to date. Three months ought to be straightforward to predict; much longer than that and it may be like trying to gaze into a crystal ball. Be realistic in terms of what you’ll sell, and how long it will take customers to pay.
• Make sure the cash is available for when it’s needed. Raise cash by getting rid of assets you don’t need, renegotiating terms with suppliers, and chasing overdue debts. Factoring or invoice discounting may be worth thinking about in some cases. Manage stock levels and get rid of any that’s redundant or out of date. It’s better to convert some of it to cash, even at a loss, than having it clogging up the stores and producing nothing. Talk to HMRC before letting tax debts get into arrears – they’ll usually try to help when they can. And for goodness sake keep in touch with the bank and other lenders.
• Get a plan. The people working in the business usually have a fair idea between them of what’s wrong, and what needs to be done to fix it. So trust your staff and listen to what they have to say. It’s amazing the difference that communication and honesty can make. Of course some will have personal axes to grind, or indulge in blame and arguments. You need to filter those out and that takes experience, but often it’s only a handful of changes that are needed to turn a business around. So put together a plan, get buy-in from everyone – and make sure the plan’s on paper.
• Get support. The skills needed to manage a business in distress are very different to those needed when everything’s going swimmingly. That’s why you probably need the support of someone an experienced insolvency company; someone who’s been there, done it and got the t-shirt. We don’t charge for just listening to your problems and setting out some options.
Call tri group for a free, no obligation conversation.