HISTORICALLY, more businesses fail during an economic recovery than during a recession. So what steps should owners of small businesses take to survive the upturn that appears to be under way?
With confidence among small firms at its highest level for three years, according to the latest Small Business Index, Gordon Henderson of the Federation of Small Businesses, which publishes the index, says the time to act is now, “rather than after your competition has done so”.
These tips may help:
1. Monitor workloads. As business picks up, staff may be working longer, which in turn can lead to mistakes and even accidents. Remember, your staff stuck with you during the hard times, so support them as things improve. By monitoring their workloads, you can avoid absenteeism and accidents.
2. Review suppliers. Your business needs will almost certainly have changed during the past five years, so check that suppliers, and their prices, are still appropriate.
3. Manage your finances. Strict credit control is vital. Why should you pay interest to the bank because your customers are slow to pay you? Banks are, in any case, still reluctant to lend, so cash is important to fund increased working capital requirements. Mr Henderson adds: “Successful businesses will make sure they are ready for the recovery by getting their finance and capital investment in place now. This will enable them to react quickly to opportunities as they arise.”
4. Maintain machinery. Capital expenditure budgets will have been cut and maintenance schedules may have slipped. But you can’t afford to have it break down when demand is picking up, so getting maintenance programmes on track should be a priority.
5. Be ready. Make sure your business plan is up-to-date and able to guide you in day-to-day decision-making. This should help identify and exploit opportunities that arise.
By adopting the right strategy now, you should survive the recovery and not be left behind as economic growth accelerates. Contact me on email@example.com