How to stay competitive and grow in tough times
With the Australian economy registering the slowest growth in a decade, the widening US-China trade war and severe drought conditions, business sentiment and prospects are weak. They cast a cloud of uncertainty. For a small business, the impending storm can wreak havoc. What can you do to stay competitive in tough business conditions?
As you wind down for a well-deserved summer break, we’d like you to reflect on how to prepare for the ride ahead. In this post, you’ll find tips on how to stay financially sound to stay competitive and grow in tough times. Adopt them to suit the nature of your business, stage of development as well as goals.
1. Get paid on time
You should have a clear understanding of your customers’ payment ‘behaviour’. This insight can help you prepare a tighter cash flow forecast and will avoid your business landing in cash flow territory. Now, for bad paymasters, it’s perhaps a good time to negotiate a payment plan to keep both sides going. Keeping in mind some of your customers may be struggling, working out a win-win outcome augurs well for the relationship.
2. Scenario planning
Until now, Australia’s stable economic environment, one of the world’s longest good runs, may not have necessitated a worst-case scenario planning exercise for businesses. But times have changed. A volatile interest rate environment, the value of the Australian dollar, a weakened Chinese market, cyber threats and political crisis in countries where just a decade ago it was hard to imagine it might happen have created a need for businesses to undertake scenario planning exercises. Contingency plans are important for growing businesses.
3. Adopt cost control measures
Financial prudence is always a good practice, in bad and good times. As a small business, your margin of error is probably small. A small rise in the cost of production or sales can adversely impact your gross margin. Protecting your gross margin is key in tough times. Weeding out inefficiencies by reviewing processes, suppliers and machinery helps.
Tough business conditions don’t always spell the end. To survive and thrive, you need to plan for it. Connect with us to learn how.