This article provides a five point survival plan for failing businesses. Even if your firm appears to be in good health, it is still worth carrying out this audit to put your company on a better footing.
Your main priority is cash flow. Seek help as soon as you can because there are many companies which provide financial services especially for businesses. Apart from traditional solutions like business loans there are also a number of other considerations. For example, factoring and invoice discounting might be two options worth investigating. These can help to ease cash flow when you need it most. Factoring is selling on your debtors’ invoices to a third party. This means that you get your payment quickly and you don’t need to waste time or energy pursuing bad debts and late payments. Invoice discounting means that you can use your current customer invoices as collateral against a loan. Go online for sites like ABN AMRO and compare the various options on offer.
Undertake analysis of where the business is not performing. If you have staff, examine the performance and productivity of each individual to look for underperformance. When underperformance is a factor, there can be underlying reasons so it is worth talking to staff to find out what is going on. This needs to be handled carefully and with sensitivity in order not to bruise morale as this can impact negatively on other staff. Consider carrying out reviews and implementing a staff survey so that people can present their views anonymously. Where there is a performance problem, staff can generally be trained or managed into better performance. It is important to deal with it swiftly as it can undermine other employees’ confidence in your ability to manage effectively. As a general guide to maintaining good morale, reward those who can, help those who can’t and punish those who won’t.
If falling sales are a problem then you need to examine your customers, especially if yours is a business that normally gets repeat custom. If you’re no longer getting repeat custom, you need to find out why and fast. Repeat custom is the lifeblood of many businesses and it’s usually a sure sign that you’re doing something right. The chances are good that those customers are also recommending you to their associates, so losing repeat custom often means losing the friends and family network too. There may be many reasons; perhaps a competitor has developed a new edge in terms of price or customer service. Or maybe your quality has tailed off. The best way to find out is to ask your past customers. If you have their details and they’re willing to be contacted, email them with a short survey. These are free and easy to organise through websites such as www.surveymonkey.com and you may get some golden nuggets of information.
Look at your product and service range with a critical eye and ask these questions. Are your products and services good value for money compared with similar items on the market? If you’re charging a premium compared with your competitors, is the customer getting their money’s worth? Because the spending power of individuals and organisations has been cut in recent years, everyone is looking for cheaper options. This means that people are much more price sensitive than in the past. Formerly, people and companies might have been willing and able to pay a premium for quality customer service, but currently buyers are looking for bare bones products and services. Cut your prices through offering promotions to past customers and see if you can lure them back.
To learn more about factoring, have a look at this 2 page guide to invoice finance, a real alternative to the expensive bank overdraft or credit card facilities. Business funding isn’t easy to find, why not enter the Inspired Cashflow competition for a chance to win up to $1M worth of funding free of charge.