Customer credit checks and cashflow critical in 2012: Bibby
Wednesday, December 7, 2011/
Bibby Financial Services has come up with some quirky but clever tips to grow your business in the New Year, as small business owners becoming increasingly pessimistic about the future.
Greg Charlwood, managing director of Bibby, says while the festive season represents a welcome break for some, it can be a very busy and stressful time of year for small businesses.
“It is important owners and managers review their fundamental business practices to improve their company’s prospects for growth and continuing profits in the New Year,” Charlwood says.
According to the latest Westpac Local Business Sentiment Survey, which surveyed around 2,000 business owners, less than 50% expect their performance to improve in the next six months.
Meanwhile, more than 40% of respondents believe it has become more difficult to run a business, up from 33% in May.
With this in mind, Bibby has developed 12 tips for SMEs to ensure their success in 2012:
1. Look for a partridge in a pear tree. Whether you’re just starting out or want to develop your business further, be realistic about what you can achieve and know your strengths.
At the same time, always challenge certainty. Ask what is missing and search for improvement. Leave your comfort zone and go for those “birds in the bush”.
2. Don’t be a turtle (dove). Don’t hide in your shell. Instead, take a fresh look at your business offering. You may be sitting on a cash cow without even realising.
Even a slight change may dramatically boost your bottom line. Don’t shrink from enlisting professional advice to look into your business.
3. Watch out for those French (and Greek and Italian) hens. The current debt crisis in Europe highlights the need for customer credit checks.
Keep an eye on customers’ payment trends and spot potential problems before they become major issues.
4. Calling all birds. Make frequent customer contact, deliver great service and reward loyalty.
Regular communication is key to knowing your customers and keeping your business front of mind, while strong service and rewards are all-year-round strategies.
5. Golden rings rule – cash is king. SMEs should develop realistic cashflow budgets and ensure they get paid in a timely manner.
Effective accounts receivable collection frees up cash and can reduce reliance on credit. Consider cashflow finance options to manage fluctuations in working capital.
6. Make sure your geese are laying. All businesses need a nest egg. From a larger-than-expected tax bill to a quiet patch, it’s important to ensure you have the funds available.
Key to this is a regular review of your financial arrangements to ensure they are in tune with ongoing needs.
Also crucial is knowing where you stand by ensuring financial information and accounts are timely, and critical documents are maintained and delivered on a set day every month.
7. Take time to go swimming with your swans. It’s essential to take time out from work if only to tackle any pressing issues with a clearer perspective.
As well as enjoying time with family and friends, many owners and managers have their best ideas when they are out of the office.
And when in the office, they should continually invest in efficient systems, software and products to work smarter, not harder.
8. Milk your maids. Review your suppliers and ensure you are getting the best deals from them. Take advantage of any special deals on offer and negotiate longer credit terms.
But also keep in mind the importance of strong and enduring supplier relationships.
9. Form great relationships with your dancing ladies. Strong relationships with mentors, financiers, bankers, suppliers, clients and partners significantly help a business.
These relationships will endure and assist a business in good times and in bad.
10. Be a leaping lord. Successful owners and managers inspire. They are optimistic and enthusiastic, and ensure employees are just as inspired to succeed in their roles.
As a business grows, it’s important to include your employees in your vision to build a loyal and motivated team behind you, keeping your business focused and strong.
11. Be the piper piping: Owners and managers should take full responsibility for their decisions. Right or wrong, the buck stops with the leader.
Prepare for the post-Christmas cashflow slowdown and get as much of your receivables collected before Christmas so you are ready when sales become slower and debt turn lengthens after the Christmas period.
12. Bang your own drum. Don’t be shy to tell the market what you do best and remain visible. Communicate your company’s point of difference.
Remind existing customers why they work with you and let potential customers know about your business and how you can help them.