The Sunday Times
It has been a tough year for small business, but now is the time to do a root and branch review of operations, writes Sandra O’Connell, The Sunday Times
It has been a rocky year for businesses, so it is important to get a head start for 2009. To help entrepreneurs draw up their strategy for the next 12 months, we asked a number of experts for advice. Her are our 10 ways to boost your company.
1. Unblock your cash flow
“Set your budget. This is the key financial management tool for your business,” said Paul Davis, a consultant specialising in business turnarounds.
“You want to know exactly how much to spend on each large item your purchase and when you will have the cash to do it. Your cash flow projections coupled with your forecast will give you the proper timing for making purchases.”
Cut back on stock by asking suppliers to buy back at cost and order supplies only as needed. “Alternatively, contact other small businesses that stock the same inventory as you and discuss the possibility of bulk purchasing,” said Davis. “Sell off old or obsolete stock at reduced prices to turn inventory into cash.”
2. Control your credit
Small business’s average waiting time for payments was 68 days and rising, at the last count by ISME, the small and medium sized enterprises associations. “Compared to 12 months ago, 58% of small businesses are waiting longer for payment,” said Mark Fielding, the chief executive of ISME.
Introduce a proper credit management plan, starting by ensuring new clients fill out a written credit application form.
Run credit checks for free with the Companies Registration Office (www.cro.ie) or for a fee with Experian (www.experian.ie) and alter the terms you offer depending on what you find. Look for ways to reduce your exposure, such as upfront payments. If a customer has a problem paying you, look at setting up a payment plan.
3. Let staff take time out
Consider introducing sabbaticals to reduce your salary bill while retaining skilled employees. Giving just one staff member 90 days’ unpaid leave will cut your wage bill for them by almost 25%. Such offers can be welcomed by employees looking to take an adventure holiday or spend more time with their families. Staff may also be interested in unpaid time off in school holidays. In more serious circumstances, another option is short-time working. Temporary week on-week off arrangement can halve the wage bill, with staff entitled to social welfare for the downtime.
It is also worth reviewing all functions with a view to outsourcing.
4. Strengthen your sales
Improve your relationship with existing customers. Be explicit about valuing their business and look for opportunities to sell them complementary products. Protect margins by adding value, for example by providing a 24-hour service cover.
Where you lose existing business or fail in a pitch for new business, find out why and see if you can tailor your offering.
New businesses must identify decision-makers and start cold-calling. The Sales Institute (www.salesinstitute.ie) can help.
5. Spread your networks
People like to do business with people they know. Start networking by joining a chamber of commerce (www.chambers.ie) or networking groups run by Plato (www.plato.ie) or your local enterprise board (www.enterpriseboards.ie).
Join referral groups such as Business Networks International (www.bni-europe.com/Ireland) or private networking operators such as Tig Alliance (www.tig.ie) or, for women, www.networkdublin.com.
Linkedin, (www.linkedin.com), the online networking service is free to join. Patricia Murphy, who runs Tig Alliance, said: “The average business person has a network of 350 contacts. Each person you ask has their own network of 350 contacts, so make use of theirs.”
6. Be Innovative
A Central Statistics Office report found just under half of small firms invest in innovation, compared with two-thirds of larger enterprises. Part of the problem is the belief that innovation entails heavy investment in technology. It doesn’t.
Aidan Shine, the assistant chief executive of the South East Business and Innovation Centre in Waterford (www.sebic.ie), said: “In the vast majority of cases, an innovative company succeeds by a series of incremental steps.”
For specific innovation projects, the government’s Innovation Voucher Initiative (www.innovationvouchers.ie) is worth €5,000 and can be exchanged for advice and expertise at most third-level colleges.
7. Go global
The domestic market may be suffering, opportunities still exist abroad for the right products and services. Enterprise Ireland’s international selling programme can help participants break into export markets (www.enterprise-ireland.com)
The Irish Exporters Association’s European sales channel programme helps appoint third-party sales channels for companies that do not want to sell directly overseas (www.irishexporters.ie)
Dublin City Enterprise Board (www.dceb.ie) runs an export marketing initiative fund that can provide up to €5,000 towards the cost of travelling to trade fairs, as well as the creation of marketing materials for overseas markets.
8. Work the web
One of the cheapest ways of selling, either at home or abroad, is via the internet – and a website gives customers the opportunity to buy from you around the clock. For free information go to www.openup.ie. Find out about search engine optimisation to help online customers find you. Go to www.seochat.com or the Irish Internet Association’s website (www.iia.ie) to get started.
9. Reboot your computers
Can’t afford to invest in new IT? Then make the most of what you already have. The Enterprise Board’s Tech Check programme (www.techcheck.ie) offers small firms a review of their IT systems to identify where improvements can be made.
Everything from hardware to software and cash registers to customer relationship packages can be audited for under-used potential. The subsidised scheme costs just €150, a fraction of the open market price, and it promises its reports are jargon-free.
10. Don’t skimp on training
In difficult times, the inclination may be to spend less on training. Don’t says Avine McNally, the assistant director of the Small Firms Association (www.sfa.ie).
“If anything, training is more crucial than ever as a result of the downturn,” she said. “Only now are companies realising they don’t have sales skills or the management skills required to guide them strategically.” Subsidised training courses are provided by the SFA, ISME (www.isme.ie), chambers of commerce and local enterprise boards.
Skillnets (www.skillnets.ie) offers heavily discounted owner/manager-led training.
Fas’s One Step Up initiative (www.fas.ie) is aimed at moving workers in all sectors up the “value chain” through subsidised training.
For larger or longer-established firms with overseas trading potential, Enterprise Ireland’s training grant offers up to €1,500 a day for an external trainer to provide management development training.