Interest rates have been raised for the sixth time in a row from 1.25% to 1.75%...
The Bank of England's decision to increase rates by half a percentage point makes it the largest increase in 27 years...
This will without a doubt will hit people hard...
It will hit businesses hard too...
- An increase in interest rates can affect a business in two ways: Customers with debts have less income to spend because they are paying more interest to lenders...
- Sales fall as a result. Firms with overdrafts will have higher costs because they must now pay more interest...
Every year in Florida you may have noticed that between mid-August and October store owners can be seen boarding up their stores because it's tornado season...
It makes perfect sense for them to protect what they have...
So the storekeepers board up their businesses to protect them and they hunker down and wait for the storm to pass...
But here’s the question what do the looters do❓
They rub their hands with glee...
They see the storm as a huge opportunity...
So you’ve got exactly the same event...
But 2 groups of people have totally different reactions to it🤔
Now I am in no way condoning looting but I do believe that the looters show us as business owners an alternative...
Now is the time to be actively looking for the opportunities because they will be there but you’ll never see them if you choose to hunker down...
And this quote gets right to the heart of this.
You will not be able to outsell the big boys or your bigger competitors but you can outserve them and that gives you an advantage...
The great thing about being an SME is you have the ability to be nimble and fast and that gives you a clear advantage over bigger companies...
Here are our top 10 tips...
- Understand the margins on all of your products and services... If you were to look back through history the businesses with higher margins tend to fair much better in a downturn, so it makes sense to know your margins and it makes sense to have higher margins 🤔
- Increase your prices and increase them NOW! Don’t wait until you absolutely have to increase them, your business needs to make a profit without profit it will not survive 😵
- Market the hell out of your business... Market it like you’ve never marketed before, and in particular market the hell out of your highest margin products or services 🤨
- Make sure your financial accounts are up to date... In any downturn, you’re going to have to make some big decisions and if your accounts aren’t up to date you will be making those decisions based on poor information, you’ll be making decisions based on feelings, not on facts 🙄
- Slow down the cash leaving your business and you do that by slowing down the speed at which you are paying your bills, if you have 30 days terms, pay on day 30, not a day sooner, not a day later, and speed up the cash coming in, you have to reduce what is known as your cash gap 🔽🔼
- Create a battleplan for the future of your business, now is not the time to leave the future of your business to chance, look at all the options and have a plan for both best and worst-case scenarios 😉
- Have numerous bank accounts... I suggest 3 an operating account, a tax account, and a profit account the operating account is used for the day-to-day expenses of running your business, the tax account is where you put all the money that belongs to the taxman VAT corporation tax etc the profit account is what it says on the tin its where you put your profit it's not necessarily easy and it can be a huge shift for most businesses but the clarity it gives you is life-changing and you will be surprised how much more efficiently you will run your business 🤩
- Get really busy building strategic partner relationships sometimes known as strategic alliances, a strategic partner is a noncompeting business that has the same target market as you, if you’ve got a host of strategic partners and you are each scratching each others backs passing leads and referrals to one another it’s got to be one of the most cost-effective ways to generate leads into your business 👨🏭👨🔧👩💻
- HR contracts... the sad fact is you may find yourself in a position where you might have to lay people off, but it has to be company first you may think that sounds a bit heartless but holding onto people because you feel guilty laying them off is putting your company into a position where it's at risk, if your company doesn’t survive you can't help a single person 🤨
- Other streams of income, are you out there actively looking for other business opportunities❓ They will be out there but you're not going to find them unless you look for them 👀
Bonus tip... Never, never stop training your team, your people need to be the best they can be, truth is in business the one thing you will always need is a satisfied customer, one who comes back to you time and time again, and who tells others about you, your team have got to be on their 'A' game at all times 👍
If you want some support give me a call I'm here to help...
