Phil MeekinView Profile
Sometimes when you are in business you can be too close to the problem. It could be that your company may be carrying historical debt which threatens its future existence. Or you may be unsure about pumping more money into your existing business.
You may feel that this is throwing good money after bad.
Different people have differing opinions of what caused the current economic crisis. It could be global influences, the actions of some banks and city institutions, government action or inaction, the collapse of the property market, and perhaps even we consumers should also take some blame. However, nobody can argue that one way or another all businesses are feeling the effects of the recession.
If you are a business owner, the effects of a recession can be keenly felt. Falling sales can impact on profits in many ways. Lower profits can quickly threaten even the survival of the business. It is easy to overlook very obvious solutions which could help the situation, for example:
- Know how much you need to take to cover your overheads- sounds a bit obvious but it can vary significantly in changing times. In a very small business it may be easy to calculate the “break-even” position but with a larger operation up-to-date management accounts are essential. If you wait until the year-end figures come back from your accountant you could have been loss-making for months before you take any action.
- Look for ways to minimize costs without compromising the business. If sales have shrunk review labour costs; are you carrying surplus capacity in other areas?
- Increasing sales in a contracting market is difficult but consider whether you can diversify to reflect the changing economic environment. You could, for example, try appealling to people’s desire for frugality.
- If you have managed to cut back overheads consider low-cost marketing initiatives.
- Review your systems to tighten up credit control and reduce wastage.
Sometimes when you are in business you can be too close to the problem. It could be that your company may be carrying historical debt which threatens its future existence or you may be unsure whether pumping more money into your existing business would simply be “throwing good money after bad”. It is at times like this that a second pair of eyes can help.