Rules for Survival in an Economic Downturn
At VentureNavigator we recognise that things are currently tough for new and and growing businesses. We've worked with Doug Richard to produce his 6 rules for surviving in a downturn. If you'd like to find out more, read our 3 full length articles on these topics.
1. Cash is King
Manage cash - if you're out of cash and out of credit, you're out of business. You need a good 13 week cash forecast, generated NOT from the income statement but from a detailed understanding of receipts and disbursements. Monitor trends in your cash flow to keep on top of any sticky situations. More...2. Collect With Passion
On a related point, manage receivables aggressively. Businesses are holding on to their cash longer than before, resulting in late payments. These late payments are having a ripple effect through the SME community. Receivables will trend up, and some of your customers may become troubled as well. Don't keep extending credit. More...3. Don't Depend On Anyone
Keep a close eye on your suppliers, and have alternatives. In a downturn, some of your suppliers may become troubled as well, and you need to think about alternative sources for your critical inputs. More...4. You Can Always Cut More
You can forecast expenses, you can’t forecast revenue. Look for places to cut expenses. When times are good, companies tend to add staff and expenses that are nice to have, but not critical. It’s time to take a fresh look at those. More...5. Talk To Your Lenders
If you have debt financing, stay in communication with your creditors. Don’t wait until it’s too late before speaking with your lender. When you are already in a crisis and haven't provided any warnings, situations may prove tricky. Maintain constant communication. It will help you should you ever need to renegotiate terms. More...6. Business Survives On The Bottom Line. Not The Top Line
Don’t worry about growing revenue. Worry about growing profit....Make sure you understand what drives profitability in your business. To spur demand, you may have to get creative with pricing and product offerings, and you don't want to put something out there that is actually unprofitable. More...
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About Doug
A successful entrepreneur with 20 years' experience in technology and software ventures. Doug has appeared in the BBC's Dragons' Den and is currently touring the UK with his School for Start-ups