SME’s need to brace themselves for a tough 2012, and ensure that they are hardy and can take advantage of opportunities that will inevitably make themselves available over the next 12 months.
A few things to look at to ensure your business stays financially healthy:-
People – Ensure your People are happy, motivated and feels part of the team. Your people are your most important asset. It is interesting that this is rarely valued as an asset on the balance sheet. As a business owner, you cannot be good at everything. Focus on your core strength, and ensure you have others (either employees or outsourced companies) who can make sure that the other fundamental parts of the business are looked after.
Debtors – ensure your customers are paying on time…. Possible to get funding (debtor factoring)
Inventory – Make sure your stockturnover is optimised. Holding inventory that is slow moving is expensive and dangerous!!
Tax – Make sure you are minimising your tax bill. It is a major chunk of your expenditure
Accounting – Ensure your accounts are up to date, and you have a system where you can regularly review your accounts. Include regular P&Ls, Balance Sheets and Cash Flow forecasts
Financing – Ensure you have adequate resources to fund your business…. Remember the 3 most important rules of an SME – “cash flow, cash flow, cash flow”
Make sure you are not using expensive loans to fund long term debt (such as credit card debt). There are bank loans and equity available for well-run SME’s
Insurance – Risk mitigation is key. Ensure you have adequate insurance at the best possible price. I have seen many businesses close their doors as a result of not having adequate insurance cover!
The Queensland floods showed us that it’s the fine print that can make or break your claim. Make sure you’re covered for the protection you’re paying for…
Ark General Insurance is a broker that can partner with you during times of crisis!!
Revenue and sales are the lifeblood of any organisation…
Ensure you have in place a measuring system for “Leads, Proposals and Sales.” Once you know how many Leads convert to Proposals to convert to Sales… you can identify where your bottlenecks are and focus on strengthening them.
You can only reduce your expenses to 0 (and you thenn don’t have a business) but your revenue is highly scalable!
Look after your margins and only make sure you are selling to people who can pay their debts!
Remember: - “Revenue is Vanity, Profit is Sanity and Cash Flow is King and Queen.”