The effect of a downturn in the market has strong implications on businesses of all sizes. No matter how successful your business seems to be, a gloomy market can have negative effects in terms of revenue and the chances of growth. But an economic downturn isn’t always bad. Opportunities exist all around us, we just have to open our eyes to them.
Reduced work typically means more time available to work on your business, rather than in your business. Below we’ve highlighted a few things that as a small business owner, you should be looking at to strengthen your business during an economic downturn.
Use Cloud-Based Technology to Improve Internal Systems
The increased availability of cloud-based applications has meant that no longer are these systems only available to large multimillion dollar companies. Small businesses can now take advantage of online software without forking out the massive expense. You’ll be able to save time and effort by streamlining an extensive range of tasks, including job management, inventory management, invoicing and debtor tracking, which can all assist in keeping a positive cashflow. There are some significant efficiency gains as well as straight cost gains to be made, which will go straight to your bottom line.
Pay Suppliers Early in Exchange for Discounts
In this market, cash is king. What that means is if you offer to pay your invoices early, often your suppliers will offer a slight discount. This could be as high a 5% on certain items, which again is straight profit. For businesses who have large cost of goods, this kind of strategy can be very lucrative.
Negotiating Some of your Larger Costs
Rent is one large cost to a business that comes to mind. Over the last couple of years, there has been a dramatic fall in the value of real estate in Perth. Bad news if you have investment property, but fantastic news if you’re a business owner. Landlords are often offering incentives of around 20 – 25% for new leases signed. What that means is that if you are paying $100,000 a year and sign a five year lease, that’s between $100,000 – $125,000 worth of incentives (either rent free periods or fitout contributions) that are being offered. If your lease is up and your landlord isn’t budging on price, don’t be afraid to look around and strengthen your operating costs for the next 18 months.
Collecting Money Upfront or On-Time
A well organised collection process is key to avoid being left with large debtors and even bad debts as some companies fail to survive this economic climate. When clients need work done, they are happy to pay for it. The longer you wait after this period the less likely they are to pay and the more likely it is to take you time to collect it. Money in the bank puts you in a stronger position for the rest of your business and means you can make more of the decisions above on the front foot instead of the back foot. There are plenty of online accounting software programs that have a debt collection feature, so you don’t have to spend time chasing payment. Talk to Carbon if you’d like to know more.
So now that you can see that an economic downturn isn’t all doom and gloom, focus on the positives and look for the opportunities around you, there’s plenty out there that can strengthen your business for future success.