| Five proactive steps a business can take to | | | | The business plan should include both a |
| beat the credit squeeze including business | | | | written view of the next twelve months ahead |
| finance, planning and taking a positive | | | | and include a profit and loss account |
| approach to meeting and solving the problems | | | | reflecting the optimistic view and the most |
| that might arise. | | | | negative view with contingency plans should |
| | | | the worse scenario become a fact. A cash flow |
| The credit squeeze is a fact of business life | | | | statement calculated from the business plan |
| and is not just about money but confidence in | | | | to show the effects on liquidity is a vital |
| the market too. There are always winners and | | | | tool. |
| losers in every business situation and | | | | |
| confidence and business finance can beat the | | | | 3. Improve financial flexibility to increase |
| credit crunch. | | | | the business finance options. |
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| 1. Ensure the bookkeeping and financial | | | | Arrange the business finances with more than |
| accounts of the business are up to date. | | | | one bank and increase the number of financing |
| | | | options. A single bank may not offer the size |
| Keeping the accounting records up to date is | | | | of overdraft or loan facilities or the |
| an essential first step to ensuring the | | | | competitive rates the business requires. View |
| business owner knows exactly where the | | | | the financial market as a competition between |
| business stands. Reviewing recent financial | | | | suppliers for your business finance and |
| performance and taking positive action to | | | | utilise several to spread the finance between |
| increase sales and margins where possible and | | | | them. |
| control costs by eliminating waste protects | | | | |
| the business from surprises and downturns. | | | | By maximising financial flexibility options |
| | | | for bank accounts, loans and overdrafts and |
| By having available the recent costs, views | | | | financing asset purchases the effect on |
| and action can be taken to reduce those costs | | | | business progress can be minimised. Consider |
| and in some circumstances to increase | | | | leasing agreements, invoice factoring and |
| business costs where the profit potential is | | | | other specialist financial institutions in |
| highest. For example a detailed examination | | | | addition to the main bank account provider. |
| of advertising and promotion costs may | | | | Cash flow and working capital requirements |
| indicate some campaigns should be reduced | | | | are crucial. |
| while the money saved invested in better | | | | |
| performing areas. | | | | 4. Go out and get more sales. |
| | | | |
| Not all sales produce the same profit for the | | | | When sales go down it is easy to become |
| business. By concentrating efforts on the | | | | depressed. Fight it and remember how the |
| highest profit margin products and services | | | | business obtained new sales channels and |
| the effect on working capital can be reduced | | | | customers in the past and exploit the |
| which can take the pressure off working | | | | opportunities in the future. Focus on the |
| capital funding. | | | | unique selling points of the business and its |
| | | | products and revitalise campaigns to increase |
| 2. Preparing a realistic business plan can | | | | sales. |
| help the business plan ahead. | | | | |
| | | | Consider sales and product diversification |
| Many small businesses prepare a business plan | | | | into both related and other areas. There are |
| when starting up especially if government | | | | always new opportunities including new |
| grants or business finance is to be applied | | | | products and markets, selling existing |
| for. Failing to prepare an updated business | | | | products to a wider audience including |
| plan during a credit squeeze can be a plan to | | | | increased geographical presence. It may help |
| fail. | | | | to list all sales activities in sales |
| | | | channels and look for more sales channels in |
| During a credit squeeze a business can find | | | | which they company can operate. |
| itself operating in an unstable market where | | | | |
| the rules and actions of the past might not | | | | 5. Ask for professional advice and |
| be evident in the future. Banks increase the | | | | assistance. |
| cost of borrowing, customers save money by | | | | |
| leaving the market and sometimes failing to | | | | Increase the level of communication with each |
| pay or at least taking longer. Suppliers | | | | professional advisor including accountants, |
| tighten their grip by increasing prices and | | | | financial advisors, solicitors, bank managers |
| demanding tighter payment periods. | | | | and business advisors and any managers of |
| | | | financial institutions. The more the merrier |
| Business takes steps to protect income, cash | | | | and by keeping in touch more opportunities |
| flow, liquidity and in extreme cases | | | | and more favourable responses will be |
| survival. That is why failing to meet these | | | | possible. |
| new challenges is a plan to fail. | | | | |
| | | | There is no such thing as a silly question |
| Prepare a business plan on the basis of the | | | | when the future of the business and its |
| recent history and extend the financial | | | | employees are at risk. Discussing options |
| results forward following the recent trends. | | | | with a variety of professional advisors |
| Input into the financial forecast the | | | | increases those options and if increased |
| opportunities that can be exploited to | | | | business finance is required for growth or |
| increase business and take a realistic view | | | | survival in the future, the higher level of |
| of the potential negative factors that may be | | | | personal dialogue will ease that route |
| suffered. | | | | forward. |
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