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Surviving in business
#62

Surviving in business requires a range of commercial, personal and management skills. To survive in tough times means careful management of your business and being extra alert to financial, operational, management and marketing issues. The points below will get you thinking about these issues.

Finance

Cash shortages can prevent you from meeting your financial obligations and make it difficult to expand your business. In some cases it will mean you will need to close your business. It is important to know your cash flow position. To manage your cash flow, take note of the following tips.

Account for Every Dollar and Cent

• Install an accounting system that produces relevant financial reports and meets tax requirements.
• Keep your financial records and bookkeeping up to date.
• Use the information in your accounting system to draw up a budget and cash flow forecast.
• Manage your cash inflow and outflow - be prepared for anticipated tax instalments and other payments.
• Do your banking regularly, both for security reasons as well as keeping track of your cash flow.
• Reconcile your bank statements regularly, double-checking receipts and payments with your own records.
• Ensure that you receive, record and retain all tax invoices for GST taxable purchases to support your claim for input tax credits.
• Consider visiting your accountant every three months to review your business performance.

Money Matters

• Bill your customers early and often.
• Keep a detailed account of all your debtors and act promptly on overdue accounts.
• Promptly follow up any dishonoured cheques.
• Consider offering discounts for cash sales or early payments of credit purchases.
• Consider alternatives to improve your sales terms, eg lay-by terms, payment terms, credit terms.
• Keep a detailed list of amounts that you owe. Your debts may build up without your knowing.
• Use payable credit terms to your benefit, increasing the effectiveness of your cash flow.
• If suppliers want to be paid early, ask about discounts for early payments.

Final Money Tips

• Manage your investment debt. Don't over-borrow.
• Keep some cash for rainy days.
• Don't over-commit your personal expenses.

Better Business Tip
Remind your staff never to pay accounts if they have not been provided with a tax invoice bearing an ABN. Never assume that your staff understands the importance of collecting valid invoices and receipts - or you could find yourself
at the end of the financial period with a very large pile of non-claimable receipts. Keep in mind that bottom line profitability is often dramatically affected by the sum of many deceivingly small expenses.

Management

• Use professional advisers - the money this costs is an investment, not just an expense.
• Watch trends in your business and the economy, review your business plan and update regularly.
• Regularly review your business performance and identify if you have met your goals.
• Review business insurance policies annually to ensure that coverage is appropriate.

Better Business Tip
If your workday is out of control, consider a period of "no phone" time. By setting aside at least a couple of hours each day where you don't take any phone calls, you'll be able to make progress on important tasks (such as returning yesterday's phone calls). The phone is a great tool but don't be a slave to modern communication technology.

Better Business Tip
Regularly plan time blocks to do the more mundane management tasks in the business, such as filing and account
keeping. If your files, paperwork or accounts are in complete disarray, set aside a whole day to get up-to-date.
The best strategy is to implement management and administrative systems in your business to make it easier to keep affairs orderly on a day-to-day basis.

People

• Try to pay staff electronically or by cheque - avoid cash.
• Introduce staff incentives that encourage sales.
• Acknowledge staff performance and encourage good working morale.
• Determine the reason for staff turnover, if applicable.
• Identify training needs of staff and encourage ongoing learning.
• Be aware of occupational health and safety (OH&S) issues and have risk management policies andprocesses in place.
• Ensure that staff and clients have facilities that will enhance relationships and satisfaction levels.
• Review the decor and layout of your premises to ensure that you are conveying the most professional and
appealing image to clients.

Better Business Tip
Don't neglect training. Try one of your local workplace training organisations for upgrading basic skills in your workplace. If you are a regional business requiring specialised training, have only a few employees and can't afford to send them to the city, invite your competitors to join with you and share the cost of bringing a professional trainer to your area to train all of your staff jointly. Working together will only improve the performance of all of your businesses. This must ultimately be of benefit to your industry.

Better Business Tip
A great way to benefit from your staff's wealth of expertise is to give a few of your staff members time off to prepare
a 30 minute session "How to ..... (do something in a particular area of your business)". Put aside a couple of hours
during or after work and divide your staff into groups. Have each small group trained by a staff member and then
rotate the groups. Everyone will benefit from a variety of short and sharp training sessions.

Office Management

The functioning of your office can be improved by making sure that:

• papers and electronic data are filed so that they can be easily found when needed;
• the mail is collected every day and sorted immediately;
• the office is kept clean, tidy and well organised;
• the phone and all enquiries are answered in a timely and professional manner.

Consult staff and advisers to identify ways to improve the efficiency of the office and production/service delivery processes.

Better Business Tip
Sometimes employees know more about what's happening in the company than you do. Give them a chance to have their say and always show you're interested. A suggestion box, regular staff meetings or brainstorming sessions, or even Friday afternoon drinks can give staff a chance to contribute ideas. Never underestimate the pool of skills that your employees can contribute to your bottom line success.

IT and Telecommunications Management

• Identify the computer system and software, furniture and equipment that will improve efficiency and develop a realistic replacement or acquisition plan.
• Regularly review the telecommunications system to take advantage of the latest technology and pricing policies.

Your business communications can be improved by making sure that:

• computers are regularly cleaned and defragmented, and operating systems and software reinstalled;
• anti-virus software is loaded on every computer and regularly updated;
• files and settings are routinely backed up and back-ups are stored in a safe and secure place;
• the most common problems with the computer system can be fixed within the business;
• you have a reliable technician who can help with more complex computer and technology problems;
• the business has an email address;
• the correct phone and fax numbers and email address are on all stationery;
• mail, email and message banks are checked and answered daily;
• clients and suppliers can always get through to staff or a message bank.

Sales

The sales process can also be improved by making sure that:

• there are systems in place to ensure that quotations and work are done on time and in a quality manner;
• there is quality, up-to-date information available on products and services;
• there are innovative customer satisfaction processes and complaint mechanisms, and staff know how to use them appropriately;
• records are kept of all sales activities.

Product Inventory

• Install an inventory system and do regular stocktakes.
• Introduce measures to ensure that stock is rotated and that stock levels can be adjusted in a timely manner,
when necessary.
• Review storage facilities and maximise safety and security.
• Ensure that there are measures in place to minimise stock damage.
• Introduce processes and systems for checking the quantity and quality of goods received.

Marketing

• Regularly review and update your marketing strategies.
• Monitor market trends and changing needs of customers. Adapt to their needs, because they won't adapt to yours.
• Maintain a competitive price strategy. Look at what your competitors are charging.
• Identify your core customers and occasional customers. Work out strategies to attract repeat business from both groups of customers.
• Identify a unique selling proposition (ie a unique aspect of your business that will give you an advantage).
Work on this advantage to keep you ahead.
• Work on promoting your business through your customers. Develop advocate customers that promote your business.
• Keep up-to-date on product and service development and technical change. Consider attending relevant trade shows and exhibitions that may inspire your business.
• Look at offering add-ons or package your goods or services to meet your customers' needs.
• Encourage follow-up orders and work by delivering promptly and always check quality of the product or service delivered.
• Consider advertising in a group or co-operative to increase the effectiveness of your advertising.

For More Information: Contact your local Business Advisory Service on 1300 650 058 to talk over business management issues.

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