Adam Abela, CEO of Float, shares some great business tips that can help you during difficult times.
Are you feeling a level of anxiety about your business at the moment?
Interest rates are rising, which, depending on your industry, may impact your business’s demand.
When interest rates rise, there is less disposable income in the economy, and people tend to tighten their belts.
There has also been a minimum wage rise, which may put added stress on small businesses that may be on a knife’s edge.
So, if this is causing you anxiety, you are not the only one.
Some businesses are feeling the same thing.
But there is some good news.
Fortunately, we have a heads up on where things are going so we can make some adjustments and hopefully get our small business through some challenging times.
Now, I’ve put together three business tips.
They’re not rocket science, but the whole idea is to encourage our business owners to think strategically about their businesses.
What usually happens is, and I’ve been through it myself when things get tough, the business owner takes on a lot of the work themselves.
This means they have less time for strategic thinking and analysis.
This could lead to the business being less efficient during a time when the business needs to be running super efficiently.
So here are three business tips that may be able to help you and prepare for small business challenging times ahead.
Business Tip Number One: prepare for finance before you need it
I’ve spoken about this many times, but once you know you need finance or hit hardships, it’s generally when your business is struggling.
Those struggles will probably be reflected on your interim P&L figures.
Unfortunately, you may be less attractive to the banks when that occurs.
If you’re getting finance personally, your business may be struggling to the point where your wages may have to drop, again affecting your finance application.
Act before your business is struggling.
We know that there are hard times ahead.
So, if you think you will need working capital at some stage, get it when you and your business are most attractive to the banks, not when you’re least attractive.
Here is a tip: if you’re able to get finance and you’re getting it just as a fallback and you think you may not need to use it, get a separate offset account.
Keep it topped up.
You’ll have access to a cash reserve and won’t be paying any interest on it.
It’s a win-win.
You may sleep better at night knowing that if things get rough, at least you have a cash reserve there that you can fall back on whenever you need it.
If you’re a Float Accounting client and need assistance setting something like this up, give us a call, and we’ll help you out.
We’ll put you in the right direction with one of our partners.
Business Tip Number Two: know your business and understand your current revenue drivers
Keep up to date with what is driving your revenue demand for items.
Things change rapidly in economic downturns.
Even when a business is going through good times, we know that downturns can change that.
Keep up to date with what is driving your revenue and cut out any unnecessary services or products that may be causing micro-losses in your business.
We do not want micro-losses.
For example, if you’re a cafe, you might find that your demand for a particular item has dropped in the colder months or whilst interest rates are high.
For example, larger meals, or pricier items on the menu.
Maybe dropping a certain item off the menu will mean your inventory and logistic costs go down.
Or, let’s say you might be able to shave down your trading hours for certain hours, causing micro-losses.
Running super efficient is the key.
Knowing your business is what will allow you to make these decisions.
Dan will be bringing out a video soon about business dashboards, and we are so strong on dashboards because it provides you with live data.
Business Tip Number Three: being adaptable is essential
Adapting your product line and making changes in your business to the demand.
Know the environment.
If there’s a decline in demand due to a reduction of disposable income in the economy, then think about your product line and adapt.
For example, you’re a floor sander or a floor painter, and you traditionally do three to four coats of paint on a floor.
You could provide cheaper options to those selling a house or an agent doing a home up to sell.
Maybe providing two coats will make your product much more affordable to these types of people and increase the demand for your product.
It’s just an example, but you get the point.
So, thanks all for your time.
Again, today’s exercise was just really about helping us think strategically.
These are just three small tips, but there are so many things that we can do to help our business be super efficient, which is the key.
Allow yourself time as a business owner to take a deep breath and think about, high level: how can I make things much more efficient in my business?