1. Keep on top of your bookkeeping
Knowing how much money you have available and what your outgoings and sales are like on any given week or day is paramount.
Relying on having money in your bank account and putting figures into your spreadsheet once a year will not recession-proof your business. To fully understand your business and make cuts without affecting profit or losing clients, you need to know and understand your expenditure.
The way forward is to work smarter, not harder. It's also something
cloud accounting can help you with. Cloud Accounting gives you real-time access to your accounts, which will help you keep your business profitable during a recession. By reviewing your finances, you can make those vital business decisions with ease.
Get those accounts up to date, and get to know your business. A good accountant or bookkeeper will not only do it for you but will give you a ton of suggestions about what else you can claim or how to increase your profit. Plus, their fees are allowable expenses as well.
Expenses, especially subscriptions, can creep up if you don't keep an eye on them.
I have recently spoken to a client, who pays for a gym membership, to which she hasn't been for 18 months, but she thinks she will go back one of these days, so she doesn't want to cancel. Except, that's over £600 down the drain.
Schedule a regular time to work on your business and review those expenses and subscriptions. Then, cancel any subscription you no longer use or don't feel like they are giving you value. It may only take an hour a month if you do it regularly, but it will save you hundreds of pounds. Remember, you can always subscribe again if you change your mind.
3. Check your inventory regularly
Holding a large inventory is quite a biggie for small businesses without significant reserves. Your business may be profitable, but if you keep it in large amounts of stock, you may still have trouble paying suppliers and consequently go into liquidation.
It is crucial to find just the right amount of stock you need, especially during a recession, because the market isn't stable at the moment, customer demand may change, but your suppliers will still want their payment.
Equally, by checking your stock regularly, you will find trends and stock that sells well or better than others. You can build on that, get a larger order and get a discount or cut out the stuff that doesn't sell well and lower your expenses by not ordering any more. If it's not selling, it's just dead money.
4. Automate as much as possible
Automating processing will save you a lot of time and money. You can make the software work for you, even if you are not very technical. You don't have to do it all yourself.
Time is money, and if you spend time doing the same jobs repeatedly, it may be more profitable for you to automate the process and do what you love and what brings money into your business. Make it as easy for yourself as possible.
Xero is fantastic and will help you to see your finances at a glance, will make invoicing simple and integrates with just about anything.
5. Research your suppliers
Having suitable suppliers can make a massive difference to your business. It may be easier to go to the first website that sells what you need and buy it there, but is it the best price and quality you can get?
Researching suppliers and finding a wholesaler may help you cut expenses and bring more profit to your business. They may ask you to do a minimum order, but you will be able to do it because you have automated your processes and know your expenses. You know, what's popular and what you can sell.
Checking your purchase ledger will help you manage your cash flow and help you manage your finances better.
6. Assess your client base and build relationships with them.
Knowing your clients is essential, but even more so during uncertain times.
Who are they?
What do they like, and where do they hang out?
How did they find out about your business?
How much do they usually spend with you?
How often and when do they buy from you?
People may be careful with their spending during a recession. Knowing your clients may help you with marketing strategies and targeting the right audience at the right time, therefore spending your money where it will be most effective.
7. Outsource
You may feel uncertain if you can afford to outsource anything at all, but the question is, possibly, can you afford not to? Whatever you are thinking about - accounting, marketing, sales, etc.,
As yourself:
Are you good at it?
Do you like doing it?
Do you spend vast amounts of time on it, getting nowhere?
If there is a problem, do you know how to correct or solve it?
You can claim those as allowable expenses, and you may find it frees your time, gives your confidence and brings profit, which will help you overcome these challenging times.
Lastly
It is important to know your business to keep it profitable during a recession. Knowing your numbers will enable you to spend your money wisely and where it's needed at the given time. So think ahead, schedule some regular time and work on your business because a recession may also bring you opportunities.
Book your free consultation to see how we can help you to look after your business and keep it profitable during a recession.
