Resilience seems to be a bit of a buzz word at the moment.
I found this quote on the internet Business resilience is the ability an organization has to quickly adapt to disruptions while maintaining continuous business operations and safeguarding people, assets and overall brand equity. … Business resilience planning is sometimes referred to as business continuity planning.
So, what is the worst disruption that could happen in your business? Or what are the weak points in your business, what keeps you awake at night.
Main customer goes bust owing you money? Massive bill lands in the in tray? Customers stop buying? Raw materials shoot up in price over night? Supplier goes bust? Supplier unable to supply vital part? Delayed delivery of supplies? Main number one staff put in there notice to leave? Main number one staff walks out without giving notice? Piece of equipment breaks down? There’s a change in legislation? You fall ill and can’t work? Computer gets hacked? Web Site goes down? Loan company request immediate repayment? You don’t win the quote you were banking on? Overwhelmed with orders? Can’t pay the wages?
Can you eliminate the potential disruption, reduce its impact or make a plan to cope with the disruption if and when it happens.
Remember what affects you could also affect your competitors and they may not be as ready as you to cope. They say every cloud has a silver lining so is there an opportunity there?
If you would like help creating a business continuity plan please do get in touch.
11 Reasons why you might consider it. It was 10 but I thought of another!
The potential customer doesn’t align to your values Don’t compromise on your values – it’ll end in tears Just say No Thank you! Or price yourself out the market but don’t just ignore them
Potential customers credit rating is less than zero. Unless you get cleared funds up front – don’t do it! Why risk your business for there’s ?
You are too busy / Their deadline is too soon Their rush job is now your rush job! These are the worst types of customers. Sub contract? Charge more? Unless your supremely confident in completing it on time back away.
It will detract from your current customers A bird in the hand and all that Could you quote a longer delivery date to give yourself chance?
You could only do an inferior service of deliver an inferior product Reduce the specification of the job/product
Can’t afford to do business with them would you have to buy materials or stock before they paid you? Ask them to pay a deposit
Not profitable – did you under quote? Go back to the customer and explain you’ll have to requote – chances are you got the job because you were the cheapest in the first place
Too far from your main product /service Is it really something you don’t want to get involved with? Is it worth it? If not pass them onto someone else – you’ll make two people happy who may pass business to you in the future
Out of your geographic area Again, pass it onto someone else as above
They want the product/ service out of your normal operating hours Could you charge more for this service?
Your premises are too small Could you rent larger premises just on a short-term basis – an empty warehouse or office?
Is there a creditor in your business you’ve forgotten about like the VAT, PAYE, or a supplier or even you’ve got the wage to pay at the end of the month?
I had this issue a few times in my business – not always of my own making eg. Amazon suddenly decide to delay payment because of some infringement I didn’t know about.
What I did learn was that the more time you’ve got to sort the issue out the easier it is to fix – how do you do that? With a cashflow forecast!
Top Tips Cashflow Forecast Create a cash flow forecast so you can plan how to get out of this tight spot.
For future reference – Keep your cashflow forecast bang up to date and keep a close eye on it, that way you will be able to see cash squeezes coming up much sooner.
Sales Sell yourself out of trouble so follow up old quotes and lapsed customers. Speak to your best customers and offer them a deal.
For future reference Follow up every sales lead – it’s an expensive business getting leads in both time and money so don’t waste them.
Debtors Do you give credit? ie. do your customers get their goods/services before they pay for them?
Many people don’t pay their bills until they get a statement. Some not until they get a reminder and some not even then, they wait until you threaten legal action! Have a plan what to do with those going beyond your terms and patience.
Go through your list of creditors, if they are over your stated terms of payment give them a phone call, don’t waste your time with an email. Have a script of what you’re going to say before you pick up the phone.
Always keep it friendly and nice, try not to fall out with your customers unless they are persistent bad payers and if they are ask them to pay proforma in future.
Ask them if you can have payment today. If they can’t ask them when they anticipate paying, if it’s within a reasonable time frame make a note to call them on that date. If you’re getting the run around send a 7 days before action letter.
Don’t pussy foot around – why should you be stressed out because your customer is slow in paying? They’ve had the goods or services so now they need to pay.
If they still don’t pay send them a 7 days before action letter. There are lots of templates on the internet you can use.
Optionally you could hand the job over to a specialist debt collection firm of solicitors. Often they will send the 7 day letter without charge. When the 7 days are up they will give you the option to issue a County Court Summons and it’s a simple tick box exercise for you.
Most people will pay up after receiving a 7 days before action letter.
For future reference – Can you take a deposit? – Can you shorten your payment terms? – Invoice for your goods or services as soon as you deliver them, don’t wait ‘till the end of the month – If you don’t already take credit/debit cards set yourself up to take them – even if you are a service based business – make it as easy as possible for people to pay you. – Don’t give customer too much credit – especially if them going bust would cause a serious cash crisis in the business. – If it’s just one large customer who’s caused the tight spot find more customers so you’re not reliant on this customer.
Creditors Do you have a good relationship with your suppliers? Ask them for extended payment terms but if you promise a payment date stick to it – they may not be so amenable next time you need to ask.
For future reference – It’s best to keep good relations with suppliers so they will be more amenable to requests like these but also you maybe one of the first ones they will call when they have special offers plus they may share information of trends in you market.
Stock Do you carry stock? If no – move on! – Get rid of slow/non-moving stockGet rid of slow/non-moving stock – Find the top selling items by Value and then top sellers by Volume, offer them to the customers who most often buy the product. Avoid discounting – far better to try and do 3 for the price of 2 there by increasing your potential sales revenue. – Will the supplier you bought the stock from take it back?
For Future reference – Don’t buy so much! – there may be an attractive discount to buy in bulk but until you know the popularity of the product and you can gauge demand it’s better to sacrifice some margin and buy small amounts. – Keep an eye on slow/non moving stock and get rid ASAP – Holding old stock can cost you up to 25% of the value every year
Service Based Businesses You will not have any stock to sell off or many suppliers to negotiate with so can you can bundle your services up into packages and forward sell them. Could you offer pre-paid gift vouchers?
For Future reference – Package up your services with a range of different options and levels of service so you have something to sell to everyone
Temporary Overdraft or Extended Overdraft Talk to you bank, go with a plan, management accounts and cashflow forecast. Show them how you are going to trade out of the tight spot.
For future reference – Use a cashflow forecast to predict cash needs with worst case scenarios eg. Biggest creditor delays payment for a month – Negotiate an “in case of need” overdraft with your bank – Change bank! – Review your outgoings are there any you can cancel – Build up a cash reserve. – Start a new deposit account and put something by each week/month to cover the VAT, PAYE
You think I’ve missed a trick? Please let me know!
If you are in a tight spot right now please do give me a call and we can talk it through, I would like to help.
Why you should have a cashflow forecast 1. Avoid running out of cash and going bust! 2. Prepare for large cash out goings eg. VAT, rent, wages 3. Sets a target for sales 4. Avoids over trading 5. Helps grow the business faster in a controlled and sustainable way 6. Helps plan the cash gaps 7. Helps with budgeting and controls spending 8. Answers “What if . . .” questions – “what if I lease a van?” 9. Avoid putting more of your savings into the business 10. Helps get more external funds (Banks, Family, friends) 11. Gives a greater understanding of the business 12. Reduces sweat and worry – Peace of mind!”
If you don’t know your numbers, you don’t know your business.” Marcus Lemonis
If you haven’t got a Cashflow forecast and you want some help setting one up please get in touch. Call/what’s app 0759 0673704 or FB message
Pricing up services is a lot more difficult to do that pricing up products. And neither are an exact science!
It needs to be approched from several different angles and and average taken – along with good old gut feeling (but be brave!)
First off work out how much you want to earn per year – how much do you need for a really comfortable life style. Divide that by 52 (weeks) then by the number of chargeable hours you want to work in a week. Then if you think you’ll only sell half that amount of time double the chargeable hourly rate you want. Keep KPIs on chargeable hours you could do in the week and also the actual hours you can charge for. The goal is to make them equal.
Next work out how long each service or project is going to take you, include time on the phone and on emails and maybe some time doing research. Your experience of running your business will help with this – some customers will be a dream others will be a pain! Use the figure from above to calaculate the cost in time.
Also – Try and find out what your competitors are charging.
– ask some current customers what they think of your pricing You will find the prices you should charge somewhere in that mix!
Remember everyones buying decision is based on 80% emotion and 20% logic (price). Your marketing should reflect this and the better you address the emotional side of the purchase the smaller the logic plays a part in the decision so the more you can charge!
If you’re not careful in creating your marketing copy, you may inadvertently end up with features laden descriptions of your products or services. This can be unfortunate, in that most clients and customers will base buying decisions on the benefits they perceive the product or service to provide, not its features. Most of us have been well-trained in telling people what they’ll get when they buy a product/service…how ‘it’ works…not what it means to them to buy it…what ‘it’ will give them if they own ‘it.’
Think of the feature as the description and the benefit as the result. Then re- write your feature statements into benefit statements. You’ll save prospective buyers the trouble of trying to do it themselves…which they generally won’t.
Consider the following example pairings of feature and benefit statements:
Feature: We’re open until 10 every night. Benefit: Because we’re open late every night, you can shop at your convenience and don’t have to take time off work
Feature: Our day care center provides age-appropriate stimulation Benefit: Because your child will be stimulated using age-rated activities and certified daycare workers, their mental development will be accelerated. We care about your child’s progress.
Feature: We use only high quality woods and adhesives in building our furniture. Benefit: Because we use only the best in making our custom furniture…your purchase will be a one-time, long-term investment that’ll outlast you.
Feature: Our bookstore features comfortable chairs throughout the store Benefit: Because we provide comfortable chairs throughout our bookstore, you can relax and read snippets before you buy the book. Know what you’re buying and you’ll enjoy your investment that much more.
Feature: I have over 20 years experience selling houses in the neighbourhood Benefit: Because I have over 20 years experience selling homes in your neighbourhood, your house will be sold quickly, for the highest amount possible, letting you focus on other important things. Let me take the stress out of selling your home.
If you don’t believe in the power of ‘benefit-selling,” re-read the five feature statements above; then compare them to the five benefit statements. Which one in each case stirred or compelled you more?
In my travels around businesses in Dorset I sometimes find there are small changes business owners can make that can make a big improvement in the way their business runs and the profits they make. I thought I’d share a small section of them with you . . . . .
Know where you are going Do you get in your car with out thinking how you are going to get to your destination? What’s your destination, how are you going to get there and when?
Invest your time wisely If you need more money you can borrow some but you can’t borrow more time, there is a finite amount every day. Is that meeting, that job going to move your business forward?
Know your Numbers As you sit there reading this do you know how much your business is owed? How much it owes? How much you banked this week? Are these numbers going up or down? Knowing your numbers is the blood of the business – is your business loosing blood?
Systemise the routine – humanise the exceptions Systems should run your business so that you don’t have to. Leverage your time by systemising / documenting the routine tasks in your business the best ways to do them. What can you systemise in your business now to save you time in the future?
Take the pulse of your business with KPIs How many enquiries a week? How many sales or quotes a week? Just by measuring these tell-tale signs in your business they will improve. How fast is your business pumping?
Make a plan to grow your business A business that isn’t planning to grow will slip back because your competitors are planning to grow – how are they going to do that? By taking your market share! Make your business pump faster. How much market share can you afford to lose?
Eat that Frog Unpleasant/difficult task can over shadow the day and often don’t get done and then get shovelled into the next day. Just do them first or better still as they arise. What did you put off ‘till today?
Listen Listen to your customers, listen to your suppliers, listen to your competitors. Knowing what the trends are in your sector will save time and money and keep you ahead of the game. What are they saying, what are they thinking, what can you do about it?
Look after your team Engaged and committed staff will look after your customers, who in turn will look after your business with more orders and referrals and then the business will look after you with more profits! Will your team go that extra mile for a customer?
Make time to work ON your business. This is taking actions on your business that will have a long term benefit. What are you going to do in your business today that you will thank yourself for in the future?
Bonus 11th Tip!!! If you don’t know the answers to any of the questions posed above or your answers need improving – get in touch with me – I can help you find the answers