Most businesses face a slump in business at one time or another. Here’s some tips on what you can do.

There are three key areas of your business to help you overcome a slowdown:

1. Liquidity – managing the cash flow;
2. Marketing – bucking the trend; and
3. Overheads – prudent risk management.

Manage these three areas and while it won’t be all smooth sailing, you will be in a better position to manage any problems arising.

Liquidity
Stock levels – with a slow down in sales, keep a tight check on trading stock and when necessary, let stock levels run down. Be prepared to take a more active role in managing stock levels.

Tighten controls of debtors – take a look at the way you manage debtors and where the payment process can be tightened up. Late payers need to be brought under control now before they impact on your cash flow.

Capital Expenditure – If you were considering any major capital expenditure, depending on your cash flow position, you might want to consider a deferral.

Cash Flow Projections – Take a look at your cash flow projections in the event of a slow down. If you are likely to need more cash, speak to your bank now before it becomes a crisis. Rolling 3 monthly cash flows are a good idea.

Overheads
Staffing – As staffing is a major expense, try and keep tight controls on the use of this valuable asset. If sales are likely to be slow, look at how to manage your staffing levels. Staff may want to take annual leave over this period, or you may be able to look at the mix between casual and permanent staff. Don’t carry more staff than you need.

Wait and see – you might want to take a wait and see approach to overhead expenditure, where it is discretionary.

Marketing
Ramp it up! – Your marketing effort may be the key to overcoming your customer’s reticence to buy over the next three months. Take a look at what differentiates you in the market and how you can get closer to your customers to overcome any buyer reticence.

Don’t compete on price alone – Anyone can offer sales and discounts to attract the attention of buyers. Look carefully at your cash flow position before launching into a discount strategy. It’s not always price that customers care about!


Weigh up the costs – weigh up the costs of any marketing effort before launching into a massive spend. Soft dollar marketing may be a much better idea.

_{All information in this newsletter is, to the best of the author’s knowledge, true and accurate. No liability is assumed by the author or the publisher for any losses suffered by any person relying directly or indirectly upon this newsletter. You are advised to consult professionals before acting upon this information}

Greg Eden |Eden Associates Ltd

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