During the current economic conditions we are seeing and reading an awful lot of information regarding job losses and business failures. Certainly, times are becoming more financially difficult so here are a few key points to help business owners prepare a little better.

1. Maintain a Cash Flow Forecast

List down all the cash inflows and outflows for you business and try to look forward 3 months. If you can forsee a period where cash flow maybe tight then speak to your bank about it now. The bank will be more sympathetic now rather than when the situation becomes desperate.

Also keep on top of the people or companies who owe you money (debtors). Do not assume that all you are owed will be paid. Try to plan for any debtor who is unable to pay.

2. Reconciling Your Bank Account

Don’t just look at your balance. Make sure that the cheques you have written historically have been presented and cleared your account. Don’t be taken by surprise when that cheque you wrote 2 months ago is suddenly hitting you current account balance.

3. Reviewing You Own Salary

Can the business continue to manage the level of salary or drawings you take from your business or can the world cruise be put off for a year or two. Leaving a little extra cash in the business will allow you to mitigate risks like debtors not paying (see point 2). Assuming the risk passes in the future, you can still draw the money then take that cruise. I’m sure you’ll have earned it.

4. Review Your Overheads

Consider the effectiveness of every overhead (staff, premise, service providers etc) you have and see if the overhead can be squeezed a little more in terms of its efficiency. If it can be made more efficient, can it be provided cheaper. Even consider if it can be provided by someone else.

Simpson Financial Services is a privately owned business like yours. In that, we have experience in these matters. Where we think your circumstances would be even better served by other professionals we will make you aware of that.

Contact us and arrange a meeting today to discuss these aspects of business planning in more detail.