There is a lot of nervousness about what is happening in the economy currently. Whilst we’re not technically in a recession, and may yet avoid it, there is no doubt that increasing inflation and interest rates are causing issues for businesses across the board. Worse still, the media seem determined to hype us all into a state of panic.
So if the current state of play is causing you sleepless nights you’re not alone! However, there are 3 key things that you as a business owner can do today to get control back and beat the overwhelm.
Get a handle on your cash
Overwhelm can have business owners burying their head in the sand. But your first action isn’t complicated.
Getting a handle on your cash is as simple as;
- Checking what’s in your bank account(s)
- Mapping out how much you owe. This can be suppliers, employee obligations, loan repayments or tax
- Working out how much you are owed. Primarily by your customers, but this could also incorporate any grant money, loans you are drawing down on or investment funds.
The aim isn’t perfection or mapping every dollar, it’s just visibility so you can make decisions. Target reviewing these metrics weekly.
Review your expenses
The aim here is to eliminate waste by identifying expenses which don’t move your business forward. Some examples of where you can optimise your spending are;
- Unused or underused subscriptions, tools or services. The business equivalent of that fancy gym subscription. Can they be cancelled or can you move to a lower tier if you’re not taking advantage of all the premium features?
- Expiring commitments eg. rent. This can be an opportunity to renegotiate or cut back on space you are no longer using.
- Financing costs eg. bank fees, overseas transaction costs or interest rates on loans. If fees are too high, particularly on overseas transactions consider using a non bank provider if your business is frequently making these kinds of transactions. Similarly can you renegotiate or refinance lending arrangements? If you are a loyal customer who has always met repayments, even the big banks have the ability to negotiate. It’s always worth a phone call.
~Business Game Changer Special Promotion~
Identify opportunities
- It might sound counterintuitive given point 2, but again the aim here is to optimise expenditure and that means spending more in areas which give you the most return eg.
- Marketing opportunities with high ROI
- Your people. Most industries are short staffed, make sure you invest in the staff you value. That doesn’t only mean pay rises, what do they value in terms of benefits, training and most importantly your time?
- Where are your revenue opportunities? Increasing revenue is often overlooked in a downturn, it’s not just about cutting costs
- Identify where you provide most value for your customers
- Where are you able to raise prices?
- How do you increase customer retention (because retaining a customer is more cost effective that attracting a new one)
- Which contracts can you renegotiate to gain more value
- Extend payment terms or negotiate an early payment discount
- Swap out features you don’t use for ones you need more of
Taking these actions now will help you get control over your business and more importantly your mindset.
And once you beat that overwhelm you’ll be ready to take advantage of the opportunities that a tough economic climate can provide.
- Opportunity to reset your business model
- Opportunity to take a leadership position in the market with the right investment and focus
- Tough conditions breed creativity in business; new ways of working and new ways of approaching business.
What can you do today to give your business the advantage?
Book in for a free consultation today to find out how we can help you take back control of your finances.
By Michelle Kvello
About the author
Michelle Kvello is the founder of Lantern Partners, a virtual CFO firm, working with founder CEOs of start ups and scale ups. She has a personal love of driving entrepreneur success because early in her career she realised there was a need for founders to have access to good commercial and strategic financial support. Often the health and hygiene compliance work was sorted, but the missing piece of the puzzle was the partnering support to help the business really grow. She founded Lantern Partners with the vision of being that partner.
Recently named one of the top 50 Women in Accounting (2021) and top 50 Small Business Leader (2022), she is passionate about using her voice to support women in the industry, as well as business owners. She hates the idea of people feeling “stuck” whether professionally or in business when information she shares could unlock that!”
