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