Here are 10 rules of engagement that will help you to recast your business and succeed in the new economy:
If you have big debt receivables and even less currency, it does not make much sense. A organisation will only operate efficiently when it is paid on time, so keeping a decent cash balance with the organisation is crucial.It is important that you get your clients or debtors to pay on time and if required provide them with incentives to do so. If unpaid invoices are becoming a concern, you can even look into discounting invoices. However, cash-flow also includes managing your payments. Ensure you pay your vendors on or just before the due date, which will help in conserving cash.
If your business is doing well and you think others may be interested in being a part of the growth story, it may be good to raise money in lieu of equity in the company. From listing on an SME exchange to private placements, a small business today has the means to raise money through equity. Raising money through equity is a good source of raising funds, but is best explored when the economic optimism is high. During a recession or slowdown, it may be difficult to get equity investment. However, as the saying goes, Raise money when you don't need it, you may consider fund raising through the equity route during a boom so that you have enough liquidity as a contingency.
Track your finances daily
and start today
Install a key indicator system to track your business and have daily, weekly and monthly financial reports issued. Follow profitability per job, per week, per client, per product. Use these indicators to focus on your most profitable products or services. Make nothing that does not bring in a profit.
and overhead at any cost.
Look for items that does not move or turn frequently. That's where your cash is locked up in your cost of materials, labour, and so on, waiting to be turned into cash after it’s sold and the receivables collected. This can result in a huge cash drain. Now a days moving to coworking space is a better idea to reduce your office overall cost.
Train and cross-train
If every job or task is learned by at least one additional person, when the primary person is out, the secondary person cross-trained to perform the task can leap in and save the day. And so work continues, and productivity remains high despite the absence of a key player. Smoother production, greater productivity and happier customers mean a better bottom line.
Review your marketing and reduce
spending on traditional media
Use the internet and focus on existing clients first; get more out of them. Internet marketing will save many companies. In short, it means that there are folks on the internet making profitable hits on products, services and entertainment.
sales and discounting.
Don't give away your product; instead, compete with service, quality and uniqueness. Create a unique product and have a competitive advantage. The big box stores cannot compete with you, especially on service. It's the small-business competitive advantage.
to reduce cost
Several startups have taken the route to downsize their team as a measure to reduce overhead cost and cut down business expenses. Startups are fueled by VCs funding are finding it increasingly difficult to raise fresh rounds of funds. Those startups that somehow find investors will likely have to give more equity up and raise less money per round, compared to previous rounds. With entering into the phase of economic slowdown, it natural for investors to become more risk-averse and invest in those startups that are already operating in profit.
This means tracking and analyzing key indicators, financial reports and productivity. Get smaller first and more profitable; then grow slowly and carefully.
That’s what wins in the long run. Never forsake this principle.