Running a business can be tough and you might be struggling to make ends meet right now. It’s natural to feel stressed and anxious when money is tight and the news is full of talk about recessions.
But a recession does not have to mean disaster for your business. There are plenty of businesses who thrive during a recession and plenty of businesses which lose money during boom times.
With the right mindset, strategy & actions you can weather this latest economic storm and come out the other side stronger than ever.
Here are some practical tips to help you manage your cashflow and survive these challenging times.
Firstly, face your fears head on. It might be tempting, but don’t bury your head in the sand and hope the problem will go away. Assess the state of your business, allow yourself to freak out, and then move on.
Facing the worst possible outcome will give you a level of peace and clarity to enable you to dig deep, be resourceful and get through the tough times.
It’s also important to understand the landscape. Create a simple cashflow forecast by listing all your expenses that are coming up and the money you expect to come in, along with the expected dates. Focus on the next 4-12 weeks and use this information to make decisions about what you need to do next.
Next focus on what you can control. Don’t worry about factors outside your control. Instead concentrate on creating a cashflow forecast, delivering the best value and service possible, managing stock levels, controlling and cutting your expenses and make sure you keep your marketing activities up.
Think about tax and talk to your bank. If you’re struggling to pay your taxes you could set up a payment plan or use tax financing. The key thing is to keep IRD informed about what’s going on. If in doubt chat to your accountant about the best options for you.
Talk your bank early and be honest about your situation. If you have loans, look at whether it’s worth switching to interest only or considering a repayment holiday. Short term loans or OD extensions can be helpful in a pinch.
Mange your debtors and creditors. Send invoices frequently and don’t be scared to follow up on late payments. Make it easy for customers to pay, offer discounts for early payment and consider requesting deposits or partial payments up front.
Pay your creditors on time if possible as we all know the pain of being on the receiving end of customers who are slow payers.
Finally, ask for help with managing your cashflow sooner rather than later. Don’t be afraid to ask for help managing your cashflow. Talk to your accountant sooner rather than later. They have the skills to help you, but the longer you leave it, the harder it can be to turn things around. Having a sounding board and practical advice can help cut through the overwhelm and get you back on track.
Find out how Nicki (Chief Encouragement Office at Trio Accounting) helps her clients here: https://www.trioaccounting.co.nz/