Money
Issue No. 46 - April/May 2009
Recession-proof your business
by Jacqui Colwell and Jacqui Colwell
In today’s financial market, it would be difficult to find any business unaffected by the global economic downturn. Yet despite all the gloom and doom, some businesses and companies continue to do well. There is no denying SA business conditions have declined in the past year, but NAB’s business surveys show they remain more positive here than in other states.
The companies that continue to do well will be the ones that plan and maintain their focus on growth.
NAB has compiled a list of tips to help business ride out the downturn:
1. Plan your success
All successful businesses need a good business plan.
Yet 53% of Australian business owners do not have one, and 97% of SA SMEs have not done a plan this year.
Having a business plan takes on even greater importance during a downturn. As the economic climate changes, your business plan should change with it to help you ride out the challenging times.
2. Don’t stand still
In tough times there is a temptation to focus all your energies on the here and now, and put plans for growth on hold. However, your business will go backwards if it is not growing with inflation. Growth can be achieved by increasing sales to existing customers, attracting new customers or improving profit margins.
Expanding existing business is generally the least expensive way to grow. This might involve encouraging an increase in the frequency or volume of business to existing customers, or diversifying to offer new products or services.
Attracting new customers may require cutting your profit margin today to reinvest in the business to grow your customer base for tomorrow. This might include investing in marketing and business development activities as part of your business plan.
Don’t shy away from increasing your profit margins to protect profitability, as long as you don’t price yourself out of the market.
3. Manage your cash flow. Develop a cash flow forecast to...
