1. Survival in Difficult Times

2. 1. Financially Difficult Times Economic cycle has turned Employee layoffs Industries showing significant falls in profits Major redundancies globally USA in recession 3. 2. Business Monitoring How does all this relate to you business? Are your sales up or down? What is happening to costs? Are you analysing your gross profit? What is the wages to turnover percentage? How does the net percentage compare to previous years? 4. 3. Steps to Ensure Business Survival Review - Costs - Productivity - Management of cashflow - Debtors management - Stock/inventory - Marketing expenditure - Unique selling proposition 5. 4. Cost Review Review fixed and variable costs? Can any of the costs be reduced? 6. 5. Team Members Have you talked to team members about theirproductivity? Negotiate an agreement on improving productivity Empower your team to make key decisions Ask your team for their suggestions 7. 6. Wastage/Shrinkage Reduce wastage within the organisation Implement systems to measure wastage 8. 7. Theft & Pilferage Implement security on stock received and monitorcustomers and team members within the store The Global Retail Theft Barometer Report indicatedthat 45.8 of loss was from disloyal employees 9. 8. Cashflow Forecasts And BudgetsAre Important Necessary to work on the business in planningcashflow forecasts and budgets A budget will show expected income and expenditure Calculate various what-if scenarios Cashflow forecast reflects figures within the budget Cashflow forecast highlights the need for extrafunding 10. 9. Cashflow Management Keep it simple Focus on items that effect your cashflow the most Compare forecasts to actuals Consider any changes required for preceding months forecasts 11. 10. Customers Check the credentials of new customers Keep customers Spread your risk of danger Unemployment effects Romalpa clause Personal Property Securities Act 12. 11. Debtors Management Systems review Ensuring your big customers pay Give your customers a reason to pay Follow-up your debtors 13. 12. Debtors Finance (Factoring)Can Help Finance options to boost cashflow Debtor factoring Suitable for business in sectors with very long payment terms 14. 13. Credit Insurance This policy will give you an insurance cover against apre-approved debtor not paying a legitimate account 15. 14. Work in Progress Review the jobs that are still within work in progress- Can the job be invoiced?- Can a progress claim be raised?- Is there a problem within the job? Minimise the investment within work in progress toimprove cashflow 16. 15. Stock (Inventory) Considerable cash can be invested in stock Monitor investment stock Weekly monitoring of the investment in stock Weekly/monthly reviewing of stock-turns Regular identification of slow-moving stock Relocating stock Sell slow-moving stock 17. 16. Suppliers Are suppliers prepared to offer support during the difficult trading conditions including: Extension of time for payment? Promotional support? Specialist staff to train your team members? Advertising and marketing contributions? 18. 17. Importers Consider Forward Exchange Contracts to lock in exchange rate 19. 18. Exporters Exporters should consider a Foreign Exchange Contract 20. 19. Banks/ Lenders Banks rule book Keep bank informed Review debt covenants Are you living off credit? Build a relationship with your bank 21. 20. Marketing Effective marketing plan Inside advantage Dont curtail marketing Building your business 22. 21. Profitability Profitability is far more important than generatingsales Management should be closely monitoring profit Remember a sale is not finalised until the customerhas paid The lack of cashflow can kill a business, even though itis trading at a profit 23. 22. Culture Is Important Attributes Business loyalty Strategic alliances Culture is the hidden success 24. 23. Selling A Business Decrease in the valuation of public companies listedon the Stock Exchange has affected the valuations ofprivate businesses being offered for sale The problems with raising funds has also contributedto a significant longer period for businesses to be sold 25. 24. Franchising If you are contemplating purchasing a franchise, due diligence and research are necessary. It is recommended that you: Talk to other franchisees and obtain their input on thefranchise and franchisor Have the legal documents closely reviewed by a solicitor Review the franchise system and other documentation Talk to your bank Document your systems 26. 25. Capital Review your capital Do you need additional funding? Average debtors payment terms have blown out to anaverage of approximately 60 days What taxation bills and other payment items are likely toarise in the next six months? These matters should be factored into the cashflowforecast If the cashflow projection indicates there will be problems,you need to consider whether you need to raise additionalcapital 27. 26. Leadership Is Vital For Success What needs to be done to achieve results? Where we are going? Who we are? What is the organisation trying to achieve? What is the identity of the organisation? What does it mean to customers? What does it mean to team members? What does it mean to the wider community? 28. 27. Taxation GST payments basis threshold increased from $1.3 m to$2m PAYE once-a-month filing and payment thresholdraised from $100,000 to $500,000 29. 28. Buying A Business Currently a buyers market Review business financial reports Realistic forecast for difficult times 30. 29. Insurance Review insurance policies Ensure adequate cover Review personal insurance 31. 30. Succession In Difficult Times Effective succession planning especially during difficult times 32. 31. Avoiding Problems Concentrate on core business Retail Rent incentives Avoid dependency on a few customers Website 33. 32. The Big Picture Survive the downturn and be a viable business at theend of a difficult trading period Understand the big picture Look inside your business and identify your insideadvantage Instil into team members the necessity for them tohave an amazing attitude Know your financial position 34. 33. Professional Advice It is recommended that you obtain professional advice from us on any business concerns 35. 34. What Next? We recommend a BDS Business Health Check Let us know if you wish to have a complementary meeting to see how we can help