Survival Of The Fittest

Mar 26, 2022

Three tips to future proof your business – survival of the fittest

To live a long and healthy life we’re told it’s all about eating well and exercising – we do it and it works. So that deals with our bodies, but what about our businesses – how do we look after them? There is a never-ending list of tactics we can employ to make sure our businesses thrive.

We’ve picked out some starting points which will get you on the right path, they are;

1. Bring in the money
2. Spend wisely
3. Have a contingency plan

Basic stuff you say… well, yes, it is – but it’s also very effective!

1. Bring in the money

According to a joint study by leading payments authority, Pay.UK, and Europe’s largest credit management membership body, the Chartered Institute of Credit Management (CICM), found that more than half of the country’s smaller businesses suffered from late payment, owed a collective £17.5 billion in late payments. Issues like this can cause real problems for small businesses, so what can we do?

Agree your fees in advance of completing any work.

Invoice for work done in a timely manner and clearly state your payment terms.

Make it easy for your customers to pay you. There are lots of payment solutions out there such as Direct Debit and card payments.

If your customer doesn’t pay you on time, chase them! If you have provided a product or service, you can expect to be paid for this so you shouldn’t feel awkward about asking for it.

Review your receivables (who owes you) on a weekly basis and chase any outstanding amounts.

2. Expenditure

Spend only what you need to and what you can afford.

When considering a new purchase, consider what it will bring to your business. If you can’t be sure of the answer to this, does your business need to spend that money?

If you pay your suppliers on account, try to ensure wherever possible that payment terms on your sales are shorter than those of your suppliers. In short, you want to be getting your money in before it goes out!

Review your payables (who you owe) on a weekly basis so you are always aware of what you owe out and when it is due to be paid.

If you hold inventory (stock), make sure you are only holding what you need to.

Budget for your taxation liabilities throughout the year. The bank balance very rarely reflects distributable profits and can lull business owners into a false sense of security.

3. Have a contingency plan

What would you do if your biggest client stopped working with you or your main supplier suddenly ceased trading?

How would you continue to trade if you are injured, become seriously ill or worse?

It’s vital to have a plan so that if the worst should happen, your customers / clients / suppliers aren’t left in the lurch and your business can continue in your absence. To help get you started, AXA has a useful guide for writing a contingency plan and cover some additional considerations.

We put blood, sweat and tears into our businesses, it’s only right we protect them from risk and give them the best possible future.

Thanks for reading. If you’d like to suggest a subject for us to cover, let us know!