“We have had a few problems over the past few years and need some help”
This is quite a common comment that I hear when first meeting a business and whilst most consider their business to be different, this is rarely the case.
All businesses have a common aim and that aim is to make a profit. Having delt with numberous clients in similar situations over the years, I would like to think that my methodology does make sense and does work.
So, here we are with my six tips to turnaround your business.
1. Take a step back and consider, what does the business actually do?
- Is it in a declining market or is it in a growth sector?
- Who and where are the customers that currently work with the business?
- What is the marketing policy for the business?
2. Look at the financials – say for the past three years – and what the trends are.
Look at some key cost income ratios i.e. purchases to sales, wages to sales, gross profit trends, fixed costs trends and finally net margin. Where is the breakeven point?
3. Cash Flow – what is current record – cheques returned? What is the current relationship with your bank, is there pressure to fulfil commitments as far as overdrafts and loans are concerned? Does the business have the correct funding structure in place with the bank? If you do experience cash flow difficulties then keep your creditors informed, agree and keep to any payment plans.
4. Cost Containment – where can costs be saved? This maybe staffing levels, utility costs and insurance costs but do also look at efficiency levels for each part of the business.
5. Discuss the issues with those key members of your staff. Find out what their opinion is. You never know, maybe they have some suggestions you have not considered.
6. Have a good, workable business plan in place.
If you do not know where you are going then any bus will get you there. Every business and owner needs a focus and objectives to work towards. Agree some objectives, monitor them each month and do not consign them to the bottom left hand drawer of your desk – even when things start to improve!
If a business is suffering losses, the first aim is to achieve a breakeven position. You must know exactly where that is and then work from there.
If you are running your own business, it is singularly the loneliest occupation that anyone could have. Sometimes it’s good to talk to others and share the problem. Who knows, they may be able to provide the support you need!