ALTHOUGH some local industries are booming, others are facing tougher times. It is important always to be ready for uncertain times and make sure your business could handle a potential downturn. Here are some steps to ensure you're prepared:
- Stress test your business: Determine what percentage drop in sales and cash flow it takes to force your business to a loss. List and prioritise actions to get back in the black if this happened.
- Benchmark your business: Com- pare your business with industry benchmarks to see if there are obvious differences. Work out what you can do to bring it back in line.
- Carry out a business health check: This will identify for action unfavourable changes that may have occurred in your business.
- Ensure you comply with financial covenants set by your bank: Read loan agreements and find out what your bank or finance company require. This minimises the chance of the facility being withdrawn, especially an overdraft.
- Undertake a wastage review: See if you can get a better deal on utilities like electricity, gas, telephone and internet.
- Sure up your customers: Make sure you're their preferred supplier. Solicit regular feedback.
- Keep close to your key team members: Make sure they feel secure. Give them an opportunity to put forward ideas.
- Incorporate all of the above into your business plan: A good plan will include a budget and cashflow forecast. Discuss with your bank the facilities they believe would be of most benefit if times get tough.
Neville Hughes is managing director of GTC Financial, Gladstone.
Update your news preferences and get the latest news delivered to your inbox.