One of the main characteristics of an economic downturn is that it shakes out poorly managed businesses. Regrettably it often takes many well managed businesses too, which are simply victims of unforeseen events or those events which are outside of their control.
Life in business is tough and is going to get a lot tougher. It is a fact of life that many business owners in difficult times become obsessed with matters such as tax efficiency when they should have been focussing on cash flow and survival. As the manager of any size business, what can be done do?
“Well, the starting point must be having quality management information because trading blindly without such information is a pretty high risk strategy. Any exceptional dependence results in vulnerability and there is not always a quick fix but planning to spread concentrations, succession planning and using multiple credit lines and hedging products can help,” commented Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency.
Mr. Irwin is of the opinion that it is always worth considering outsourcing – either outsourcing current operations or bringing in-house services which are currently outsourced. Some areas worthy of consideration are credit control, marketing and project management. There again, outsourcing is not always the right option as every business is different. There may be some functions which are currently outsourced where you could add value by bringing in-house. If, for example, the business has surplus clerical staffing capacity, rather than consider redundancies it may be financially feasible to bring certain operations in-house.
For those running businesses and wish to survive, the worst thing to do is nothing. Inaction, inertia and complacency can result in failure, whereas a bit of awareness and forward planning gives the best chance of surviving the current economic problems and beyond.