With 2018 set to be another challenging year, managing volatility will be a skill all business leaders will need to nurture. Here is our checklist for helping you to review your business to ensure it’s as strong as possible. In this post, we focus on the elements that you can control especially from a cash flow perspective:
Review current activity
Put the customer at the centre of your efforts, make sure your customer relationships are solid. Remember it is easier to maintain what you have rather than win additional new business.
Review and map out the main processes in your business (e.g. sales processing, order fulfilment, marketing etc.) get your team members to suggest and challenge their efficiencies.
Review your budgets and set realistic and achievable targets. Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control – target a 10% cost saving.
Review your realistic staffing needs over the next 12 months…
Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
Review your list of products and services and eliminate those that are unprofitable or not core products/services. Any services identified as ‘non-core’ can be outsourced.
If appropriate, review banking facilities and discuss future needs. If you are going to require additional funding ask for it at least 3 months before you need it.
Measure, Measure and Measure again.
Bring your planning time horizon in to the short term, establish your key performance indicators (KPI’s) and measure them on a weekly basis e.g.
Sales leads generated
The weekly review should include setting objectives and reacting early to trends, managing volatility is a hands-on activity and is the primary responsibility of the business leader. For more advice on which numbers to focus on read our blog on Keeping Control.
In challenging times, whatever size of your firm, there is one immutable truth – cash is king.
Identify and get rid of won’t pay customers, review debtors list and chase up overdue invoices. Make sure your terms of business contain explicit payment terms. Offer existing debtors inducements to pay early. Offer all debtors flexible ways to pay and assign responsibility to one individual for invoicing and collections.
One last thought…
In conclusion, in volatile times things never go as planned. Some business leaders are inclined to want to reflect and plan for contingencies. Others will wait and then react as problems arise before dealing with it. We have seen both work – when managed properly. The important thing is for the business leader to pick one style and follow it through!