How to navigate through these challenging times.
In my role as Deputy Director of Finance and Performance for two of the NHS provider trusts in the East Midlands, I was tasked with saving the NHS £8.5 million back in 2014. Through interrogating the financial management processes and liaising with key internal stakeholders, I surpassed expectations and saved them £10 million which equates to the salaries of 225 nurses.
Realising that I could get more personal job satisfaction and have a positive impact on local SME’s, I made the decision to leave an employed position in December 2019 and in April 2020, Evimero was born with the sole purpose of helping businesses to thrive, prosper and flourish.
The past year has been an exceptional year in terms of business challenges and I’m working hard within the local business community to ensure that small business owners have the knowledge that they need to be able to keep their businesses afloat. It’s with this in mind, that I’d like to share some simple financial management tips.
Manage the cash tightly - complete a cashflow forecast and review and refresh it at least weekly. This way you can foresee any challenges that are coming and you can plan ways to overcome them.
Review your payment terms – If you’ve been working with the same payment terms since you set the business up, look at whether there are opportunities to reduce these to get cash in the door more efficiently. You can put new terms in place for new customers effect of immediately and work with existing customers to see what’s viable for them. Remember that your customers are people too and they understand the unprecedented times that we’re living in, so a simple conversation could be enough.
Engage the use of a debt management specialist to bring in monies owed from bad debts, and to tighten up on processes to eliminate poor or late paying clients. As with everything, prevention is better than cure.
Stop all non-essential spend. Most businesses operate with essential costs and those ‘nice to have’ products and services. If there are things that aren’t directly linked to the current and future success of your business and they fall outside of contract terms, then consider stopping them for the moment.
Review essential spend areas and look for better deals / better payment terms – With the emergence of price comparison sites etc. this is a habit that we’ve managed to get into as consumers but it’s something that we need to ensure that we allocate time for as businesses. This could be as simple as working with a utilities broker to ensure that you’ve got the best deals, through to reviewing the costs of the professional services that you subscribe to. Don’t cut costs to the detriment of your business but doing research and asking for recommendations could result in you finding better solutions for a lower cost.
Review your pricing strategy – This is something that so many businesses shy away from for fear of losing customers, but if it’s done in the right way and communicated to your customers correctly, most people won’t bat an eyelid. Many of my clients hadn’t reviewed their pricing for over 5 years, even though their cost base had increased. A simple way to justify an increase in your pricing is to look at ways to add more value to what you do, whether that’s introducing a new level to your service or through enhancing your product.
Look for new markets to enter – You may have launched your business within a niche market but as the world is evolving, the needs for every sector are changing and there may be new sectors that would benefit from your product or service. Are there any recession proof sectors that you could target to future proof your business? E.g. education and manufacturing
Look for new and innovative ways to market your products / services – Marketing doesn’t have to be expensive but it can cost your business if you choose to shut up shop and not communicate. In the 1990-1991 recession McDonald’s took the decision to drop their advertising budget which proved to be a huge opportunity for Pizza Hut who’s sales soared by 61%, whereby McDonald’s experienced a decline of 28%.
Explore opportunities to collaborate with other businesses – One of the best and most exciting things that’s coming out of the past year are the collaborations between businesses. Are there businesses offering complementary products and services that you could partner with? These partnerships could give you access to a new and engaged audience but they could also reduce your costs through sharing expenses such as marketing.
The smallest of changes can help you navigate these challenging times. For support in making these happen and to future proof your business, get in touch.