With the new year upon us, many people are deciding upon resolutions about which they are initially passionate, but ultimately, inevitably, lackadaisical. Resolutions such as going to the gym more, or quitting smoking.
Many small businesses spent much of 2008 on the back foot, trying desperately to deal with the problems presented by the rapid economic downturn. Aside from the obvious stresses associated with keeping a business afloat, constant fire-fighting does not allow business owners to take stock and form a cohesive plan for the future.
Worryingly, research published by Lloyds TSB suggests that 26% of small business owners do not think today's economic climate has any effect on business planning. Indeed, one in four respondents to Lloyds' survey said that they did not have enough time to look again at their business plan.
As the new year begins, business owners should set aside time to review their business plan. A well thought out, comprehensive plan is the foundation of any small business, and will help you deal with difficult circumstances while better positioning you to take advantage of opportunities as they arise.
2009 is going to be a tough twelve months for small businesses. Here are some resolutions for getting your business in shape for the year ahead.
1. Look after your cashflowWell balanced cashflow is a vital prerequisite for the survival of any business. The number of sudden insolvencies in 2008 is testament to the destructive power of a sudden tightening of working capital. Therefore look at ways to plan for potential shortfalls before they occur. Do you have a relationship with an invoice financing company? If not, you may consider finding one as a matter of urgency as an invoice finance facility can go a long way towards maintaining stable cashflow.
2. Cut your costsTry to identify areas in which you can reduce expenditure. This could be as simple as shopping around for a better deal on utilities. It is worth talking to suppliers in order to secure either a discount or more favourable payment terms; they are likely to be more keen to hang on to customers than to hang on to their margins.
3. Concentrate on volumeBoth corporate and private clients will be trying to reign in their spending throughout 2009. However, this does not necessarily mean that you should allow a loss of custom. Look to Tesco for inspiration here. By discounting a huge number of items they have reduced their profit, but they have benefited from massively increased footfall. This newly expanded customer base has provided an increased sales volume, which is helping Tesco to ride out the recession.
4. Communicate with your staffSadly, many businesses will be forced to find cost savings by cutting their workforce. Cuts may take the form of redundancies, wage reductions, or a shortening of the working week. Members of staff are unlikely to be pleased about measures that limit their income, but you can mitigate the damage done to morale by ensuring that you are honest from the outset. If your workers are aware of the realities of the situation then they are more likely to remain loyal to the business, and to retain their productivity.
5. Concentrate on what you do bestThere is a constant temptation as a small business owner to try lots of different things at the same time. However, now may not be the time to branch out into uncharted territory. Be wary of spreading yourself too thin; concentrate on what you do best, and take steps to ensure that you become an invaluable player in your sector.
The onset of a new year should offer an opportunity to look at your business with fresh eyes, slightly removed from the pall of gloom that descended in 2008. Remember that viable, well-managed businesses have an excellent chance of survival - it is those business owners who put off planning and fail to think ahead that will find 2009 particularly tough.