Top Business Tips
THINK SMART
During these tough times businesses need to not only work harder but harder and smarter about the way they do business. Identify challenges and seize opportunities, focus your business plans and re-evaluate your business strategy.
Below you will find a wealth of advice and information to help steer your business through the current downturn.
TOP BUSINESS TIPS
FINANCE – MAKE IT WORK FOR YOU
Managing your cashflow
The reason why most businesses fail is that they run out of cash to pay their bills. They run out of cash because they have failed to keep on top of cashflow.
Remember being paid – and paid on time – is not a given. Here are some simple tips to help manage your cashflow:
- If you are worried about the customer paying on time – or at all – consider stage payments or even cash on delivery to reduce your risk of bad debts.
- Set your terms of business before doing business – and put them in writing. You will not be paid in 30 days unless your customers know that’s what you expect.
- Do credit checks before doing business – and monitor late payments. If companies are taking longer and longer to pay, find out if there is a problem. Do not wait until they leave you with a bad debt.
- Encourage prompt payment. Consider charging interest on late payments (your legal right on debts outstanding after 30 days) or – if your profit margins allow – offering a discount for prompt payment.
- Invoice promptly – and once again make payment terms clear.
- Check the customer is happy – there may often be a reason for late or non payment. Never give a customer a reason not to pay.
- Make it easy for them to pay by offering as many ways of getting paid as you can. BACS payments are fast and attract lower bank charges. Or a standing order can be used if they pay the same amount regularly. With cheques your late payers can always use the excuse “it’s in the post”.
- Contact customers to check they received the invoice and then find out when they are going to pay.
Prevention is best
1. Know your customer – a simple check with Companies House can confirm they are who they say they are and enable you to check their accounts.
2. Check they are a good risk – by checking with a credit reference agency, by asking for bank and trade references and by searching the Registry of County Court Judgments to reveal if those running the business are in financial difficulties.
3. Set clear credit limits for every customer – to limit potential losses.
4. Consider credit insurance – it will cover the debts owed to you.
Watch out for debtor warning signs
1. Mistakes on cheques – they forget to sign, words or figures differ, or cheques are wrongly dated - these may be genuine errors or may be a means of buying extra time.
2. Constant queries – about the product or service or about the invoice. Again these could be delay tactics.
3. Excuses – like the cheque is in the post.
4. Rumours – staff often pick up on these first.
5. Trading at their credit limit – if a customer is continually trading up to the limit or asking to exceed it, it should ring alarm bells. However, it may be that they are buying more from you and so need an increased limit.
Paying suppliers
When the economy takes a downturn suppliers may want to protect their financial position by:
- Reducing the amount of trade credit they will advance you
- Asking for payment more quickly
- Asking for stage payments or even cash on delivery
To ensure that you are not being squeezed on both sides you need to manage this side of the cashflow equation and remain a low risk for your suppliers:
1. Make sure you know when you are expected to pay – not all suppliers have clear terms and conditions.
2. Pay on time – and if you can’t do so, contact your suppliers to explain why.
3. Protect your credit rating – don’t wait until the start of court proceedings to pay. Once your credit rating is damaged, you may find it hard to get any credit at all.
4. Try to negotiate longer payment terms - if you are finding your customers are taking longer to pay you – if not, see if you can get a discount for prompt payment.
Maintain profit margins
The flip side of price is cost – you can maintain profit margins even if you are reducing prices,
provided you also reduce the cost of what you are making or providing. For example, don’t hang on to things you don’t need – it costs you to house, insure and maintain them. Consider selling surplus machinery or unsold stock, even if you don’t make a profit, to release some working capital.
It is vital to keep overheads down but avoid cutting:
- Stock levels to such a low point that you cannot fulfil new orders
- Staff you need to run your business
- Sales and marketing expenditure which you need to attract new business
- Investment in equipment or product development that enables you to remain competitive
- Insurance as you could leave your business inadequately covered
Cutting costs
Don’t get emotionally involved. Make hard-headed business decisions. You may want to keep
a particular office open because it was where you started or a certain product line because you created it. If it is losing you money, you have to lose it – or risk losing your business.
Make decisions based on the facts. A “gut feel” is not good enough. It is only when you see what is profitable and what is not that you can make a decision.
Start with non-essential expenditure – then tackle fixed costs such as utilities, stationery
and other outgoings.
Pass on price cuts. If you are under pressure to cut your prices ask your suppliers to do the same – if you can. If they won’t negotiate on price ask for longer payment periods or shop around.
*Key content contributor RBS – A Money Sense Guide.
HUMAN RESOURCES – BE IN THE KNOW
Keep on top of HR legislation
In uncertain times, it is vital to have the backing of good HR advice and support. Whether your company is deciding to restructure, up-skill staff or is forced to make redundancies, your local Chamber of Commerce can provide vital HR support free of charge to members.
Chamber HR provides peace of mind and a wealth of HR information including:
- Dedicated HR advisors on a 24/7 advice line
- Access articles to fully understand new pieces of legislation covering employment law and health & safety.
- Downloadable HR policies and forms to ensure you are compliant with all new legislation
- Consultancy advice on all areas of professional development and skills based training.
Visit www.chamberhr.co.uk for more information.
Don’t put your staff at risk
Did you know that all organisations need to comply with the Health and Safety at Work etc Act 1974 and that directors have corporate and personal responsibility for health and safety.
It’s vital that all organisations have access to a competent health and safety person as two million people suffer from work related illness.
Chamber Health & Safety provides a complete solution for small businesses including:
- A compliant Health and Safety Policy
- Template Organisation and responsibility documentation
- The facility to develop a Health and Safety Management System
- Unlimited access to a health and safety advice line, manned by experienced personnel
- Access to locally delivered training and consultancy
- The potential to benefit from lower insurance premiums
Visit www.chamberhs.co.uk for more information.
Protect your business
Unfortunately no matter how well you plan and manage your business you never know when you are going to face unexpected, expensive legal fees. This can include Employment Disputes, Criminal Prosecutions, Property & Landlord Disputes and Tex Investigations.
However a Legal Helpline is available to all Accredited Chamber members providing complete reassurance, protection and peace of mind with free legal insurance and a 24/7 advice line.
Chamber Legal Expenses can significantly reduce the risk of ligation and provide your business with essential and immediate legal expenses protection and legal advice when you need it – a valuable service in uncertain times.
Visit www.composite-legal.com/chamber/index.html for more information.
PEOPLE MANAGEMENT – MAINTAIN A HAPPY WORKFORCE
A healthy workforce
Maintaining a healthy workforce in a cost effective way can be challenging. However research has showed that doing so can reduce absenteeism and lower the risk of stress – an essential factor in getting the most out of your staff in difficult times.
Chamber Primary Health Plan provides a simple and low cost solution that can help your business:
- Provide a valuable and affordable employee benefit
- Reduce absenteeism and related costs
- Lower the risk of stress and musculoskeletal litigation
- Recruit and retain staff
- Encourage proactive employee healthcare
- Improve staff morale, motivation and productivity
Visit www.westfieldhealth.com/chamber for more information.
Stress at work
It’s important to manage the work balance of staff to ensure that pressure at work, which can be a motivating factor, does not turn into stress - especially when managing what might be a reduced workforce. A recent CIPD survey states that occupational stress poses a risk to most businesses and compensation payments for stress-related injuries are rising. It is therefore important to deal with excessive and long-term causes of stress.
AXA provide valuable tips on how to combat stress at work. A range of video advice can be viewed here.
SALES & MARKETING – MARKETING, MARKETING, MARKETING
Market more effectively
Do not reduce your sales and marketing activity. Invest in cost effective campaigns to increase your company profile to attract potential new clients and continue to communicate with your existing client base. Focus on PR, e-marketing and Search Engine Optimisation and emphasise your Unique Selling Propositions.
Ten tips for customer communications
Whether you’re bagging new customers or looking after existing ones, no amount of technology will cover up a badly written message. Here are ten pieces of essential advice for good customer communications:
1. Be consistent – use your logo and slogan! These are important parts of your brand.
2. Design matters - commission a designer, or use easy-to-learn tools like Microsoft Publisher to make your website, newsletters and flyers clear, readable and consistent.
3. Spell-check everything - it costs nothing, and spelling mistakes are an instant turn-off.
4. You know your business inside out - try out your emails and flyers on friends before you go to print or send out an email newsletter, to make sure you’re getting the message across.
5. Always finish with a “call to action” - if you want the reader to visit your website or call you up, tell them clearly exactly what to do.
6. Make sure you’re ready for the rush - If you’re sending out 1000 emails announcing a special offer, make sure someone’s ready to answer the phone if the calls come flooding in.
7. Stick to your commitment - if you start a monthly newsletter, make sure you’ve got something interesting to say every month.
8. Testimonials are gold dust - use them wherever you can. An independent endorsement of your product, or your quality of service, is the best sales tool.
9. Treat new and existing customers differently - you might not be able to give everyone an individualised email, but split the two audiences and recognise existing customers for the contribution they have made to your business. Write differently for each of these two groups.
10. Keep it simple - a succinct, two -paragraph email may be all that’s required to gain your reader’s interest. If you haven’t got anything more to say… it’s time to stop!
*Source: Microsoft Small Business Centre
Search marketing
Search engine optimisation has been sited as one of the best ways to target customers as your organisation ranks high on search engine lists. Many organisations know what they are looking for online but are likely to be open as to the vendor they choose.
Optimising your web pages is essential to increasing your search engine listing. These words should increase the volume of traffic to your site.
If you are serious about increasing your web exposure through search engines, there are many web agencies that specialise in Search Engine Optimisation. These agencies are commissioned to develop SEO strategies for your organisation and manage the process on your behalf.
Alternatively, there are free online guides which provide useful tips on which key words are most searchable and appropriate for you site.
Paying for search engine prominence puts you in control
There are a lot of websites out there so you need to show prospective customers where you are. Fighting your way to the top of the search engine rankings can be tricky, technical and time-consuming. But these days, you can buy your way to the top.
Keyword or pay-per-click (PPC) advertising is popular with advertisers, and is much less unpopular with ordinary web users than traditional 'banner' adverts.
Here are 4 top tips:
1. Carefully examine what your bid gets you - some search engines don't list strictly in bid order. Some use previous click-popularity as a guide which favours high-click ads.
2. Start small and measure constantly - by running several small campaigns side by side, you'll soon find out which search terms and which descriptions of your services yield the best response.
3. Every search engine placement is as good as the customers it reaches - find out from each search engine whether its customers match your audience.
4. Look at your PPC results - weekly is the norm, but if you have more time, daily is even better! It helps you understand which keywords or campaigns are working best for you and where your budget could be working harder.
*Source: Microsoft Small Business Centre
Generating revenue through online advertising
In a small business we all look for ways of generating an income. One such way is the placing of adverts onto your website which provide a ‘click-through’ capability. This means that someone visiting your website finds a product or company of interest, clicks on the screen and gets put through to the provider’s website.
Some website providers and hosting companies will often offer you cheap web hosting or other services if you agree to have adverts on your site.
However you must take care when doing this or you may damage your business brand with inappropriate adverts. Read more click here.
*Source: Microsoft Small Business Centre
CUSTOMER SERVICE – KEEP YOUR CUSTOMERS HAPPY
Communication is key
At times like this you need to cement your key relationships with customers – as well as your
suppliers and your bank – as this could be vital to the survival of your business. It is not just
about keeping customers happy. It is about working together and understanding their needs.
Good communication will also help you to find out if they are having problems that could
impact on your business
Value your customers
Focus on high quality customer service and don’t be tempted to cut corners. This will help retain your client base, increase client traffic and differentiate your business from struggling competitors.
INFORMATION TECHNOLOGY – UTILISE YOUR IT
Make technology work for you
Utilise your existing resource to access new markets, build new contacts and networks, improve your customer service, and maximise your sales and marketing opportunities.
Do you have the right management information?
Knowing which products are going to sell best and bring in the most profits and which costs are rising and could hit your margins, is vital. For that, you need to have the right management information. The key difference between this economic downturn and the recession of the early 1990s is information technology.
Find more customers
Obtain new leads and build strong business contacts as well as promote your business more effectively with the Business Network Online. The Business Network Online allows you to not only meet new contacts within a trusted network of Chamber members but also trade with businesses across the UK free of charge.
Visit www.thebusinessnetworkonline.com for more information.
Top money saving tips
Time is money, and in the current economic climate every small business is looking to streamline costs and reduce outgoings. But at the same time you need to be competitive and present a professional ‘big company’ image. Click here to read Microsoft’s top ten tips to help you and your business deliver more with less.
EXPORTING – GROWING YOUR BUSINESS OVERSEAS
Remember the exporting essentials
1. Do your homework: Understand the rules of engagement, particularly issues like duties and paperwork. Finding out at the outset what is required might save a few headaches later.
2. Understand the market: For instance, find out how your product and service might need to be adapted for export and what regulations must be complied with.
3. Research costs: Understand any costs you might incur – shipping for instance. A clear understanding of costs is vital to assessing the profitability of each opportunity.
4. Get exchange rate advice: Particularly in uncertain economic times, a good understanding of how fluctuations in exchange rate will affect profitability and pricing is vital.
5. Look to the future: Whilst every profitable sale is welcome, it is always worth looking at long terms market
potential, to assess whether initial investment might bear fruit later.
6. Assess the competition: Find out who you are competing with, how their products and pricing differ from yours as well as things like how and where they operate.
7. Communicate effectively: Be sensitive to language and cultural differences in your target market. Tailor your communication to suit potential customers.
8. Streamline the paperwork: Secure export certification and documentation online, to save time and money, but use only trusted suppliers.
9. Don’t over-commit: Focus your efforts on one market at a time and prioritise according to both short term opportunity and long term potential.
10. GET HELP: Export support and advice through every stage of the export process is invaluable. In many cases it makes the difference between success and failure. Contact your local Chamber of Commerce for more information about the support available to your business.
STARTING A BUSINESS – KNOWING WHERE TO START
Is that new business worth it?
- Cost each product or service: do not take on business if it does not make a profit
- Look at ways to reduce costs: this will allow you more scope to reduce prices
- Be wary of big orders: this can lead to overtrading when the business takes on more work than it can handle and runs out of money to finance it
For help when starting a business visit www.thebusiness-startup.co.uk.