4 Crucial Steps To Make Sure Your Business Survives The Recession By Colin Why At Isnare.com Ezine Articles

A few short months ago people in my town were speculating that the economic boom would last another 20 years. There was no conceivable way that the resources boom, fuelled by the unprecedented and seemingly unstoppable growth of the Chinese economy, could slow anytime soon.

With unemployment at historical lows, the place was awash with money. Everybody was earning and everybody was spending. Big! Every man-jack who owned a business was making money.

Then it went belly up. Now as a barometer of the changed times, there are luxury cars and boats for sale everywhere you look. House prices are falling. It’s a buyers market but the buyers are hiding away. Unemployment is rising.

In a matter of months the worldwide financial crisis has ended the dream run.

Now, only the fittest businesses will survive! Will your business make it through the rough times?

At the very least, you must take action now, and whatever else you might do, you must take the following 4 crucial steps:

1. Get a Handle On Expenses. Expenses often run way too high in times of plenty. Who cares when there’s lots to go round hey? Well you know that the quickest way to improve your bottom line is to reign in those expenses.

So, have a long, hard look at where your dollars are going. Trim and cut the unnecessary outgoings. You might have to be brutal but remember the survival of your business depends on it.

2. Where Are The Profits Made? Once you have made the necessary adjustments to expenses determine where you are making money. Some products or services may be marginal, some may be losers. Make sure your efforts are concentrated on the things that make money. Remember the 80-20 Rule. 20% of your products and 20% of your customers are making 80% of your profits.Watch it though and don’t confuse turnover and profit. Go after the profitable items only. They need your focus.

3. Watch the cashflow. Many a good business has gone to the wall because of lack of funds. More so today in tight financial markets where money has become hard to borrow – you must ensure that you protect your cashflow.

4. Narrow your vision. Think back to what made you successful to start with. Go back to basics and remember that ‘service’ is king. The most important person in your business is your customer. Think about him and provide the quality of product and service that he wants.

Lots of businesses think that the quickest way to lift sagging turnover is to lower prices. You may have to resort to that as a strategy later on but not before you have paid full attention to the 4 steps outlined above. Lowering prices does nothing to improve your business management. The quickest and surest way to “weathershield” your business is to ensure that your management practices are sound. Apply the 4 Crucial Steps first.

Tough times require a tougher mind-set. Focus on what you do well and what makes money for you. Don’t waste energy on negative emotions like panic or worry. Act positively. Consult experts, like your Chartered Accountant. Most businesses can survive.

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