Business Recovery | FEATURE
4. Clarity of purpose – Clarity of purpose is all about tearing up your old business plan, which is unlikely to have taken account of the recession. Re-imagine your business. Evoke the sense of excitement and possibility that prompted you to set up in business in the first place. Correct course, strike a new position and recapture your entrepreneurial spirit. Any business that does not continually innovate is doomed to fail. Do things better by doing them differently.
Neil Hughes is a chartered accountant and author of Beating the Recession: The Seven Cs of Business Recovery.
communicate your current and projected financial position is vital in gaining the time necessary to bring about the recovery of your business. When you cannot give your creditors payment within terms, give them the courtesy of the truth – don’t get caught up in a patchwork of payment promises. If you tell the truth, you do not need to remember anything. It never gets any worse than the truth.
3. Cooperation – Any business recovery plan that does not have all staff members completely behind it is doomed to fail before it starts. The forthright communication required for your bank, the Revenue Commissioners and your other creditors is even more important when dealing with your staff and co-workers. Unless the business, and all its stakeholders, pulls together, there is little chance of recovery. Adopting a positive attitude is one of the primary duties of owners and managers as the tone for everything the business does is set from the top down.
5. Cost – Cost control is the fifth key requirement for recovery. The effectiveness of cost-cutting measures will be critical for a business trying to survive in an environment of diminishing sales, reduced access to credit and tightening margins. The business owner or manager during a recession may also be confronted with the difficult necessity of making compulsory redundancies. Familiarise yourself with the various meetings with staff and selection procedures that a business owner or manager should go through when in that situation. Although cuts in a recession are necessary, they should be surgically delivered. Avoid cutting though the “fat” and into the muscle of your business, as you could cause long-term damage. The principles of reducing the outflows of a business apply equally to the household. Take the time to carefully work out how and where the household budget is spent. Adopt a zero-based budget until the recession ends: only spend what is necessary until it is clear that recovery is underway.
6. Cash – The new reality is that credit controllers are now the key to businesses keeping their doors open. During a boom period, it is the sales people that are often the heroes of the organisation but the unsung heroes in a recession are the credit controllers who quietly work in the back offices bringing in the money. It is a lack of cash that causes many businesses to fail in a recession, not a lack of profits. Cash control means releasing the ‘lock-up’ of your business, i.e. the latent profit that is locked up in your stock, work-in-progress and debtors.
7. Customers – The golden rule of trading through a recession is looking after your customers. If you don’t, then somebody else will – and probably at a cheaper price. The business owner or manager must continually ask if there is anything else they can do for their customers or clients. When you receive a complaint, you
should treat it as a gift – it’s free advice on how to make your business better. When a competitor tries to undercut you, it is your relationship with that customer that is your safety net. Beating a recession is as big a challenge as any business owner will face. However, economic history tells us that sooner or later, there will be a turnaround and employing the Seven Cs means that you will still be afloat with your finances leaner and stronger to take advantage of the inevitable revival.
the other ‘C’ of reCovery
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Confidence – There are many reasons why people enter into business. Many began working for the family firm, while others were encouraged by friends and work colleagues to take the plunge and start out on their own. For all business people, however, confidence is the key to success. In business, it is the confidence to be able to walk into work and deal with difficult staff issues; the confidence to make difficult decisions, the confidence to ask for a discount or the confidence to take on projects which perhaps your business has never done before. Confidence can sometimes come from knowing that you have surrounded yourself with people you trust, that you have taken the right advice and by knowing that you have the support of the people that you work with.
Believe in yourself and your business – this is a vital component in implementing the seven Cs of business recovery. Your confidence in yourself may have been shaken by the effects of recession, whether by a fall in profits or the laying off of staff. However, you must focus on what you have achieved, on the varied series of accomplishments that have got you to where you are in business. Think again about the challenges you have faced in your career and the actions you took to overcome them. Recall those moments of success that depended on your own determination, judgement or dedication and try to regain that confidence in your own ability.
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InBusiness May 10 59
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