How to sur­vive dur­ing tough times

Lesotho Times - - Jobs & Tenders -

THERE is no doubt that 2016 date has been a year where eco­nomic down­turns, in­ter­est rate in­creases and doom and gloom have been the watch­words. Although all these fac­tors will have an im­pact on small busi­nesses, they don’t nec­es­sar­ily mean that busi­nesses can’t grow and move for­ward.

Af­ter all, when a busi­ness is re­duced to its most ba­sic, it is all about man­ag­ing money com­ing into and flow­ing out of the busi­ness and en­sur­ing that you un­der­stand the mar­ket you serve. Man­age your cash flow ef­fec­tively and sell what peo­ple want and the re­sults are a thriv­ing busi­ness - de­spite dif­fi­cult eco­nomic con­di­tions.

The most important thing to mas­ter is your busi­ness’s cash flow.

Achiev­ing a bal­ance be­tween “cash-in” and “cash-out” can be es­pe­cially chal­leng­ing if stock has to be pur­chased and held be­fore it can be sold. A good ex­am­ple would be the cloth­ing in­dus­try where cloth­ing is pur­chased one sea­son ahead of ac­tual sales ac­tiv­ity tak­ing place.

But, cash­flow can be op­ti­mised, avoid­ing the pos­si­bil­ity of hav­ing sleep­less nights over the econ­omy. Things to put in place in­clude: Mak­ing sure that the prod­uct or ser­vice you of­fer is based on what cus­tomers want, rather than what you like. Ef­fec­tive mar­ket­ing and busi­ness de­vel­op­ment de­mand that stock is sold as quickly as pos­si­ble so that cash comes into the busi­ness. Con­trary to pop­u­lar be­lief, the cru­cial time to get mar­ket­ing done is when times get tough. In the age of the in­ter­net, small com­pa­nies can com­pete equally with much larger cor­po­rates. Open­ing a new sales chan­nel via the in­ter­net could mean bet­ter sales. Look to your ex­ist­ing clients and think about what you can do to in­crease sales to them. Of­fer­ing them spe­cial dis­counts, a loy­alty pro­gramme or de­liv­er­ies could act as sales boost­ers. Us­ing a data­base of cus­tomers, to keep your loyal cus­tomers up-to-date on what you of­fer. An e-mail news­let­ter or web­site that is kept up-to-date is great for keep­ing ev­ery­body in­formed and en­cour­ag­ing foot traf­fic in-store. En­sur­ing that em­ploy­ees are trained about the ben­e­fits and selling points of prod­ucts. If cus­tomers are well in­formed about your prod­ucts, in­ter­est can be turned into sales. Get­ting to the ideal state of en­sur­ing that money is flow­ing in, rather than out of the busi­ness, can be achieved if sev­eral steps are taken. These should in­clude: Work­ing to a re­al­is­tic busi­ness bud­get. Con­stantly re­view­ing your costs. Find ways of re­duc­ing costs by mak­ing early pay­ments to sup­pli­ers who of­fer a dis­count for pay­ments made in less than 30 days. Where you can, ne­go­ti­ate dis­counts with sup­pli­ers. Keep stock hold­ings to a min­i­mum. Stock on shelves is idle money. Check to see what sells well and what doesn’t. Re­duce stocks of slow selling items and buy good sell­ers in bulk - that way you could ben­e­fit from bulk dis­counts and in­crease your mar­gins. Pay care­fully, by choos­ing which bills to pay. Pay em­ploy­ees first, and then pay cru­cial sup­pli­ers next. Reg­u­larly re­view when you ex­pect to re­ceive money and pay it out. Know when your cus­tomers pay you, and when they fall be­hind so that you can take ac­tion to get money in. Con­sider of­fer­ing dis­counts for early pay- ment. Ask for de­posits and then order goods re­quired. You can put the money to good use while you ful­fil the order. Ex­am­ine your sup­plier and cus­tomer credit terms. As an ex­am­ple, it sim­ply doesn’t make sense to pay sup­pli­ers in 30 days and then of­fer cus­tomers 90 days credit. Don’t send out in­voices at the end of the month. Aim to send them as soon as the job is com­plete. Con­sol­i­date your loans. Re­view the rate and terms of each loan and then, if you can, con­sol­i­date them into a lower-in­ter­est ac­count. Com­pare leas­ing and fi­nanc­ing op­tions. You may also be able to save on main­te­nance costs if you lease rather than buy equip­ment. Ul­ti­mately, the key to bet­ter sales is your peo­ple. De­vis­ing a re­wards and in­cen­tive pro­gramme based on sales vol­umes for em­ploy­ees can work won­ders.

Cre­at­ing sales tar­gets and link­ing them to per­sonal inputs that are re­warded with prizes can keep the work­place happy and sales tick­ing over in dif­fi­cult times.

The one ad­van­tage that en­trepreneurs have is that they are passionate about their busi­nesses. It is this pas­sion and a de­ter­mi­na­tion that the busi­ness will suc­ceed and, of course, plan­ning and fi­nan­cial dis­ci­pline that will see your busi­ness grow­ing and mov­ing suc­cess­fully on into more pros­per­ous times. —

Man­age cash flow ef­fec­tively and avoid sleep­less nights.

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