If you own a business or manage a business unit for a major corporation these following tips will shelter you from the storm that’s heading our way.
- Look after your loyal staff – but start planning cuts. This is inevitable if you want to survive. I know this sounds a little ruthless but when the crash is over, you owe it to your hard-working loyal staff to maintain a healthy company. Focus your energy on partnering with your loyal staff. Pay what is fair and necessary to keep the talent you have but don’t tolerate mediocrity. Expect and demand excellence.
- Start a rainy day fund – Put money aside – put 30% of your profits for the next 6 months into a reserve fund. After 6 months reduce it to 20%. After 12 months reduce it to 10%.
- Bullet-proof yourself from the Tax Office. Ensure that your bookkeeping is accurate and up-to-date. During tough times the tax office will be looking to get it’s revenue any way it can. Anyone with a weak set of financial statements will be vulnerable to an audit that will drag on and on and take you away from managing your business.
- Spend less on new technology – extend your hardware warranties and do not upgrade your software unless you absolutely have to. Software upgrades not only cost you more in fees but also in implementation and training.
- But, don’t save money by doing something that costs much more in time. Don’t skimp on purchases that will otherwise make you more efficient.
- Move operations out of expensive CBD rentals. If you are in retail, boost your online presence and turn your CBD retail space into a showroom as well as a point of sale. The Apple store is one perfect example. So is the Nespresso store.
- Cut your lease time – If you rent showroom or office space, make sure your lease allows you to leave on short notice or allows for rent reductions in line with the market.
- Do not renew all your supply contracts just yet. There will be bargains for real estate space, telecommunications (voice and data), computers, office machines etc… Try and not lock in for longer than 12 months. If suppliers insist on a 24-month contract ask for a cost review clause in 12 months.
- Hire staff from your local area. People that spend too much time commuting are much less effective at work, period!
- Cut down on unnecessary business travel. It’s costly and takes your staff away from their families; which is not good for morale. Happy family equals happy work. Use teleconferencing or video conferencing.
- Sell your business – If you have been thinking of selling your business, don’t wait any longer. Today’s circumstances may be your best opportunity for a long time. If you decide to hang on and ride out the storm, then read the following 8 Tips to Business Excellence.
- Reduce Inventory – If you are in retail, reduce your stock levels. However, if your business relies on the supply of specialty items that are difficult to obtain, stock up.
- Delight Your Customers Even More – The customer will be even more ‘king’ as business competes for a dwindling share of wallet. Share of heart will become more important. So do what the likes of Apple and St George Bank do. Go beyond the call of duty when serving customers. The 9th and most important tip for Business Excellence.
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- Start planning for the upswing, but don’t be premature. The media will be quick to talk it up because that will be the sexy story. Don’t be the first to jump in and be bullish. Wait for two quarters of good economic data before you upscale and invest in new capital. Being in the right position could ensure success for years to come.