It’s easy to fall into one of two diametrically opposed camps at the moment: “The Oh Me, Oh My, We are all Doomed, Doomed I tell you” mob, or the slightly cocky and arrogant “Recession? What Recession – Stop Making Excuses – It’s all in your head” gang.
The truth – just like the hole in the doughnut – is probably somewhere around the middle.
It is important not to get caught up in perceptions and make decisions based on community sentiment – but to closely examine your own business and the things that you can control.
How long since you took your eyes of the economy and focused down into the heart of your business?
Here are some warning signs that you should be watching out for – the indicators that as well as the massive changes out on the marketplace it might now be time to implement some change –some improvements – of your own.
A Significant Increase in Receivables
Stay on top of monies owed to you. Just because a corporation has been a 'good' payer in the past, doesn't mean they will continue the habit. You might need to tighten your credit terms.
Increased Inventory
Don't get stuck with stock. The goal is to order stock, merchandise and market , then sell it and have it leave your premises in exchange for $. Make sure your systems give you up-to-the-minute stock counts. Know your stock-turns and when to start your discount cycles. No stock should EVER have a birthday in your shop. For old stock, you might want to consider moving it across e-Bay (it enables you to penetrate a market you wouldn't normally have access to).
A Drop in Sales or Difficulty in Maintaining Market-Share
Monitor your sales on a daily, weekly, monthly basis. Watch your average sale. If sales drop, immediately take action. Such as? Look at your product lines, width and depth of stock, price points. You and your team might need to brush up on your sales skills. Don't allow the drop to continue...
Difficulty in Obtaining Credit
Lending institutions are tightening their belts which means you could be affected. Make sure you have a current Business Plan and Financial Forecast. Ensure you have a good working relationship with your Accountant (who should be an integral adviser to you and your business not just the person who submits your tax statements).
Difficulty in Obtaining Growth Capital
See above
Observing Competitors and/or Customers Changing Operations, Marketing and/or Sales Strategies
You have to ask the question why? What's going on? How will this impact my business? Ensure you stay current with technology - get familiar with social networking (Facebook, Linked In, Plaxo, Twitter, etc.) and different ways to communicate with your customers. The way you've always done it may not necessarily be the way of the future...
Inability to Pay Vendors/Suppliers in a Timely Manner
Always stay in contact with your Vendors/Suppliers and, if necessary, organise regular payments. Do not put your head in the sand and 'disappear' from their radar. Its all about communication.
Routinely Accessing Available Credit to Finance Current Operations
Do you have multiple credit cards and are they maxed to the limit in keeping your business afloat? Danger sign.
Changes in Supplier's Terms and Availability
Watch for changes. If your orders are taking longer to be delivered, your suppliers are wanting upfront payment (whereas previously they've happily offered you terms) and yet you're up-to-date with all payments and have a good track record with the company, stay alert and start looking for alternative suppliers. You don't want to have outlayed money for product and then find your supplier has gone into liquidation...
So, how did you go?