I get worried when I read so many stories about the 'credit crunch' affecting small businesses. My business isn't in trouble as such, but we are being increasingly squeezed by customers paying later and poorer credit terms from suppliers. What can we do to help the situation?
This is common question at the moment and, along with my Business Link adviser colleagues, I am devoting far more time to the question of business financial health when I meet with my customers.
This starts with a financial health check which is done by the adviser together with business directors/owners.
The result of the financial health check is an action plan that is specific for the business.
You don't need to be in financial trouble though to benefit from this; remember that prevention is better than cure - so call us!
The Business Link advisers' financial health check is quite detailed, but here is a flavour of some of the things covered:
In addition to compiling a detailed numerical picture of the current financial position we ask some strictly financial questions such as:
- calculated your break even sales level recently?
- identified essential versus non-essential expenditure?
- reviewed all direct debits & standing orders - business and personal if sole trader?
- identified cost savings from all expenditure - business and personal if sole trader?
- drawn up a revised cash flow forecast for the next 6 months?
- a system to review and measure your cash position daily/weekly?
- a system which tells you what you owe and what you are owed that is reviewed at least weekly?
Other business questions need to be asked because financial problems, actual and potential, spring from short-term operational and longer-term strategic aspects of the business i.e. pricing policy, terms and conditions of trade, the customer portfolio, so we look at these also in this diagnostic.
The important thing is to produce a plan in order to attempt to halt or prevent a financial slide. The art of diagnosing the problem is, in many aspects, the easy part. We then help you to put together a short-term survival plan and support you as you implement it. At the same time we will research to see what other help there is available to you.
After the survival plan comes the longer term plan. An important part of our job as advisers is to understand what your business is aiming for in the longer-term and to make sure that you get the right help and support to achieve it when you need it. So we provide face-to-face advice and support for our customers for as long as it is required.
The financial health check, along with all of our advisory services, is free to all small and medium sized businesses in the East of England. See our website: www.businesslink.gov.uk for more information. Business Link can help you assess the health of your business in a variety of ways. You can conduct your own online business health check at Business Health Check.
If you would prefer to speak to a real person we have a telephone health check just call us.
Running your own business, even one with employees, can be lonely, but there is help and support - and a sympathetic ear - and it's free, so call us.
That's all for this month.
Business Link - the place to go for business support