Planning for an uncertain future
11th July 2018
Anyone following the news at the moment can see that these are uncertain times – not least in politics! With no immediate sign of the Brexit negotiations becoming any more settled, and an international trade war on the cards, businesses can expect continued economic uncertainty in the coming months. Consequently, it would be easy for the UK to talk itself into a recession, but while the latest quarterly figures released by the Coventry and Warwickshire Chamber of Commerce indicate a dip in confidence, the region is still showing strong performance.
In such uncertain times, it’s important to be aware of potential changes in the market and plan accordingly, but focus on what is tangible and achievable at the current time. In other words, continue doing what you do well, with a healthy dose of risk management incorporated to survive in a challenging business landscape.
Here’s a summary of some of the tools and techniques businesses can employ to minimise risk and deliver sustainable growth.
An effective business plan should be a living document - not something created as a start-up and then “filed” once you get embroiled in the day to day running of your business. Business planning is an essential activity that monitors and guides the progress of your hard work. It should be considered regularly. In the current economic climate taking stock of what has happened and being aware of potential changes on the horizon is even more essential.
Diverse client portfolio
After some recent high profile businesses going into administration (think Carillion earlier this year), the importance of not relying on one customer has been highlighted again. Where possible, spreading operations across a variety of industries, or different businesses, will help you stay in a stronger position if one falls on hard times.
Regular cashflow forecasts and a robust credit control procedure are essential tools in your risk management toolbox. Always consider the impact on cashflow if you enter into a new supplier agreement or make a large capital purchase. If you are experiencing problems with overdue invoices it pays to engage with a professional debt collection service early on and keep it consistent.
Bad debts and credit checks
Whilst it’s always rewarding to win a new client, make sure you’ve done the due diligence and credit checked them beforehand. The last thing you want is to discover your new golden client has a bad credit rating and ends up resulting in a bad debt.
Regular progress reviews
Producing management accounts is one thing. But ensuring time is taken to regularly review them and act early to prevent problems escalating is another. Good management accounts that are regularly reviewed will monitor the progress of your business against targets, identify trends (both opportunities and threats) and help your focus on the key drivers of success for your business.
For more ways to help keep your business in shape, download our fitter business tips for 2018
If you would like more details on how we can help you maintain a healthy balance sheet and plan for the unexpected, please get in touch.