An economic storm can cause anxiety and stress for new or smaller business owners. If you run a small business you don’t have the luxury of enforcing protective measures to help you weather a recession or hard times. Many business owners feel uncomfortable asking for help or advice on how to handle their credit or cash flow situation and it’s no secret you are seen as a bit of a risk by banks. But don’t let that get you down. There are plenty of other options to cut costs and get advice. Nadine Bourne from www.xlntelecom.co.uk takes us through a couple of ways in which new or small SMEs can prepare themselves for a financial storm:
1. Make forecasts
If you are worried about the future, it’s important to be prepared and ready for what is coming next. One of the most effective ways of doing this is by making a realistic cash-flow forecast. With this you can invent a couple of situations like a drop in customers or revenue and then using the forecast, assess how well your business could survive.
If you’ve got an iPhone, try the Cash Flow HD app to calculate your forecast or you can stick to good old Excel.
2. Take a look at your bank balance
Whoever you bank with, they ought offer you some shelter against your economic storm. You should talk to your bank manager about whether you are getting the best deal for your business account and whether loans or an overdraft facility are available. It’s always good to keep an eye on the press about your chosen bank for any changes which may affect lending. If the time has come to switch accounts with a new bank, really do your homework on your options by comparing deals – read the fine print and look out for any hidden charges!
There are plenty of comparison tables and tools available on the internet to compare account options if you are thinking about switching.
3. Cut your expenses
Expenses can build up a lot of overheads for your business so cutting down will help you save cash for your business. When you need to make a purchase, think about it. Do you need to buy the latest MacBook pro, or could you go with a cheaper option? Travel expenses can also add up. Consider cheaper alternatives to things like taxis to meet clients. To save even more money you could hold meetings on the phone or Skype – the added bonus being big time savings too.
4. Cut down on monthly costs
As with anything, no matter how much you budget and save, costs like rent and bills will always need to be paid on time. Since these are unavoidable and cannot be cut out, the next step is to try and save on them. Look on internet comparison sites and ask your friends and neighbours how much they are paying. Business phone and broadband can be expensive, so if you’re a small business, look for a provider who only deals with small businesses. Are you paying too much for rent? Maybe you could look for cheaper premises. And try to avoid signing up to long term contracts so if things get difficult you can get out without too much bother.
5. Think about your employment costs
Paying employees is a necessary cost to keep your business running. But if you are thinking about recruiting new staff members, first think about whether any of your current staff could fill this gap through paid overtime or as a new job role. If you do have to employ new people, make sure you recruit effectively as this can be a costly process. Take the time to find the right person for the job, don’t rush and hire someone who won’t live up to what you need.