The COVID-19 pandemic is a crisis on a scale beyond any level experienced in recent history. The good news is this crisis is temporary. However, the challenge it’s created for business remains. Now is the time to future proof your business to recover, adapt and thrive.
Below are Solve Accountants on the Gold Coast top 5 tips to improve your business today.
1. Accelerate your Sales Cycle
Sales growth may be difficult in the next 12 months. Instead, focus on improving your sales by reducing your sales cycle time. Reduce the amount of time (and resources) required to take an initial enquiry to a completed sale to a happy customer. Map your current sales cycle and look to reduce the cycle time by 25%. To put this another way, try to find a way to deliver 12 months’ worth of sales in 9 months. Look for ways to streamline the process and cut turnaround times. This will bring forward your annual revenue and result in increased monthly sales now (when you need them).
2. Improve your Cash Collection Cycle
Now you have made the sale lets ensure you get paid for it. Review your payment terms to ensure they are fair to both parties but work for you. Collect deposits, or payment in advance, where possible. Map your cash collection cycle time (debtor days) and look to reduce it by 25%. If it currently takes you 30 days to get paid then look for ways to reduce it to 22.5 days. Ensure you get paid on-time and in full. Provide various payment methods. Automate your collection procedures in your accounting software. Talk to your debtors often and early. Resolve disputes.
3. Reduce Cash Burn
Cash is king. You have earned it, and collected it, now put it to good use. Reduce your cash burn by reducing inventory levels and discounting old stock to free up cash, rationalise your staff levels to the current requirements of your business. Examine your profit and loss line-by-line and search for costs that can be reduced or eliminated. Justify your expenditure to determine which expenses are nice to have, must have or critical. Apply Zero-sum Budgeting. Remove waste.
4. Focus on your Strengths
Use this time to analyse your business. Assess your products and services to determine which are growing, which have high and low margins, and which are unprofitable. Consider focusing your operations on the one or two areas that are growing, high margin and you can deliver efficiently. Add value to your customers. Deepen your relationships with customers, staff, and suppliers. Ask for referrals. Develop a reputation as the best in your field.
5. Focus on the Long Term
Focus on building a business with a sustainable advantage. Set goals for the next 5 years. Look for ways to build a better business with long term, sustainable success. Use this process to address shortcomings in your business. Use systems and automation to your advantage. Double down on initiatives that work and remove those that do not. Seek advice and support to reduce risk and improve your likelihood of success. Focus on your strengths and deliver value.
We can help
At Solve Accountants we are here to help you build a better future. We are experienced in assisting business owners plan, build and protect their futures. We can help you assess risks and embrace uncertainty with confidence. We can help you find solutions to the big issues impacting your business today. If you would like to discuss your business financial recovery or need help please contact us now.