The top 10 tips you can use to bolster your business and tackle debt – today!
Thanks to Covid-19 and restrictive local lockdowns affecting most of the country meaning some businesses can’t physically open their doors at all.
It also means that you might have more time on your hands than you normally would as a busy business owner.
If that’s the case, then this article might have one or two ideas that you may find interesting.
We’ve pulled together ten simple ideas that you can implement in your business – today – that individually and collectively could bring more money in, reduce your debts and generally help get your business ready to burst into 2021 firing on all cylinders!
- Keep Creditors Informed
There’s good debt and bad debt. Most business debt helps the business function with new purchases and allows it to expand and improve. It’s not something to be ashamed of – actually the opposite.
Running a business is all about managing income and expenditure, so debt is a common thing.
With that in mind, it’s always a good idea to be upfront with your creditors if you do run into any problems.
If you’re having trouble making repayments then tell them.
They might have been there themselves and might be able to offer hardship plans, reduced terms or offer some kind of payment relief that might make a difference.
A word of caution: make sure that you can keep your end of any deal you agree to. The worst thing you can do is to agree to a payment plan with a creditor and then default on it.
- Take a 10,000ft high view
If you’re going to effectively troubleshoot issues within the business then you need to know it inside and out.
You might think you know how everything operates but sometimes you can be too close for too long and not be able to view or judge objectively.
Taking a large step back will give you the best view. Imagine you are looking at your organisation from way outside of it.
Make a list of what you perceive to be the strengths and weaknesses of this business – and take your time when doing this. Try to put aside any preconceived ideas or assumptions. Judge on what you can see.
Take a similar approach to its finances. Look at where the money is coming from and going to and you might immediately be able to make some savings and efficiencies.
For instance, if your business has incurred debt from something innocuous like an unpaid invoice, make sure that this doesn’t happen again – a saving made.
Businesses can leak money in any number of different ways, so look for any issues that seem to crop up more than others and are detrimental to your profits. Your fresh look might be enough to help you identify and eliminate them.
- ABP – Always Be Positive
This sounds small but is a really important factor.
Keeping a clear head will be crucial to your chances of getting out of any difficulties – financial or otherwise.
If you start to visualise your future success, actually see in your mind’s eye the successful end point of your changes then your confidence and drive will be renewed too.
If you come into work under a cloud of self-doubt or pity with associated low-energy levels then it sends unconscious signals to others that you’re giving up.
Humans pick up on these signals and regardless of the cause, they’re identified as negative – and nobody likes doing business with a negative person.
If your mindset and body language are always positive and reflect respect and trust, you’ll be surprised how often they are returned to you as a result.
- Laser focus on your cash flow
Specifically on increasing it!
There are three main ways to increase cash flow that will raise extra monies which could be used to pay off some debts.
The first way is to increase productivity.
Finding new ways to generate additional revenue or becoming more efficient at what you already do is always a sound investment. Also, renegotiating terms with vendors can accelerate your ability to pay down debt through any extra savings generated.
Lastly, if applicable, monitor your inventory levels. Keep a close eye on your stock and make sure you’re not losing money by storing redundant items. If you can, work with suppliers that offer consignment inventory or rights of return for unsold goods.
- Dust off the business plan
Always make sure you revisit your business plan at least once a year.
Don’t be afraid to change it, adjust targets or tweak processes. Nothing in business stays the same after all.
A business plan is a roadmap rather than a blueprint and even with the best roadmaps sometimes you have to take detours.
What if your business plan was flawed from the outset? If that’s the case, then maybe your financial issues could actually be seen as a blessing in disguise by giving you a chance to recalibrate.
- Look closely at your offering
Examine your products or services at a granular level – is there an issue with what you’re selling and providing?
Perhaps you’ve had issues with faulty goods? Have you been let down by a supplier which means you’ve ultimately let down your customers?
Maybe your IT systems should have been upgraded years ago or maybe your marketing approach needs to be calibrated towards a new, online-first customer.
You’ll only be able to find this out by looking at each process and product as closely as possible and seeing where you can get some quick wins.
- Create (and stick to) a budget
Approximating a monthly budget (or not budgeting at all) is a sure-fire recipe for disaster.
When it comes to your finances and cash flow, you need to allocate a budget for different areas of your business that need it and they need to stick to it.
If you haven’t got an accountant on staff then look at getting a good accounting software to help you keep track of comings and goings. But if necessary, go old school.
Grab a pen and paper and keep track of everything you buy across a period of time. You might be surprised by the results.
- Claim interest on late payments
Every penny counts, especially when you’re facing financial difficulties.
Did you know that you’re permitted to claim interest on late payments at the Bank of England base rate, plus 8%? It’s calculated on a daily basis for every day payment is overdue.
While you must outline your intention within your terms and conditions, it can sometimes be enough to deter companies from delaying any payments. It also gives you the legal wherewithal to claim should you need to.
- Evaluate your assets
Does the business have any assets that could be sold in order to raise funds and increase cash flow?
This can include outdated or obsolete equipment that you could raise money from, any older product lines that you can shift or if you’re really lucky, you might have some unused but valuable land that you could sell or dispose of.
- Organise your debt strategically
When you’re faced with various debts then it’s important that you begin to prioritise them accordingly – because some need to be paid before others.
Ideally, you should arrange them in order of interest rates. Attack the one with the highest interest rate because that’s costing your business the most money. Dedicate all your bandwidth to paying this off first, then move onto the next most expensive one and so on.
If you’ve read this far then you deserve to be rewarded with a bonus 11th tip – so here it is…
You can have a free, virtual consultation with us just by getting in touch here.
We can run through any issues you want to discuss in more detail and come up with some other solutions to make sure your business can be in the best possible shape to start 2021 – and make it the year 2020 should have been.