‘It is a sad fact of business life that some businesses will fail, and for those companies forced into liquidation in the first quarter of this year, this must be put down to experience,’ believes David Robertson, chief executive of Bibby Financial Services. ‘But, with the acumen, finance and drive to succeed, following some basic rules may dramatically improve a company’s chances of success.’
Bibby provides the following top ten tips to business survival:
- ‘Plan’ is a four-letter word – researching the market you are intending to enter is paramount. Be sure there is a demand for your services and identify who the competition is. Don’t forget to review your business plan and, if things have changed since you made it, ask yourself why.
- Pace yourself – budgeting is essential at all stages of the business lifecycle, but investing too much too soon may lead to a business becoming over-stretched.
- Negotiate longer credit terms with your suppliers but set shorter terms for your customers. Consider how early settlement or volume discounts could benefit your business.
- Lay out your own terms – establish and agree credit terms upfront. Ensure invoices are issued promptly, clearly displaying the conditions of the transaction such as “payment due”.
- Cash is king – cash is fundamental to any company and businesses must recognise the importance of generating cash and keeping it coming in. In the event of a cash flow blockage, explore alternative funding methods such as invoice finance which can release up to 85 per cent of the cash tied up in unpaid invoices.
- Streamline – look at ways in which internal processes can be carried out more efficiently and don’t be afraid to cut out wasteful tasks. Review your suppliers regularly to ensure their quotes are competitive and offer best value for money.
- Delegation’s what you need – by delegating time-consuming non essential tasks to other staff members, owners and manager will be freed to focus on the business’ core activities such as generating new business.
- Ask the experts – seek external advice from an independent source such as an accountant, lawyer or business adviser. But remember to choose carefully – it is imperative that you select someone who appreciates your needs and understands which direction you want the business to go. Counsel from an outsider may also stop any rash decisions being made.
- Honesty is the best policy – be realistic. If things are not working out how you thought they would, address the reasons why this is happening and find a new approach.
- Roll with the punches – every business, at some stage or another, will experience a certain level of difficulty. Be decisive by tackling any problems head on and dealing with them promptly.