The more things change, the more they stay the same.
No matter what the economic conditions, some business
worries never go away. Here are a few tips on how
to handle some of these eternal problems.
Customers will continue to extend
payments over 90 days.
Understand your cash flow. At the end of each week,
review accounts receivable, and accounts payable and
make sure you know what you must pay in withholding
taxes. Do not use your source deductions to pay
suppliers unless those deductions are actually in the
bank. Send requests for funds to suppliers before the
end of the month.
Overworked and underpaid will continue
to be the mantra.
Learn to pace yourself. Work to make money not save
money. Work at what you do best and delegate the rest.
Consider that if you work 2,000 hours per year and
your business has sales of $400,000, you are effectively
generating $200 of revenue per hour. Ask yourself why
you are trying to learn how to do something a subcontractor
can do in a day.
Maintaining Customer Base
Maintaining clients while working to get
new ones is going to be a challenge.
In tough times, even long-time customers may ask
you to cut your costs or they may cut back their orders.
Review the profit on your best customers, not just their
sales volume. Visit the customer and find out their
expectations for the coming year. Consider limiting
services to marginally profitable customers.
Finding and keeping good employees
is never easy.
Older employees may retire and good employees
may leave. New, inexperienced employees do not
solve short-term problems.
Happy employees are loyal and productive. Be approachable.
Let employees tell you what they need. Employees
always appreciate a bigger pay cheque, but a good working
environment and feeling valued will also go a long
way to keeping employees.
The cost of everything will continue to rise.
Capital asset costs, fuel, property taxes, light, heat,
power, insurance, and maintenance will continue to
rise and put pressure on your cash flow. The same cost
pressures will also affect the standard of living of your
own family and the families of your employees.
Evaluate all aspects of business costs and perks. Look
at discounts, value added and other incentives provided
to clients. Review perks to employees and determine
whether there are more economical solutions that will
retain the good will of the employees but not put more
pressure on your cash flow.
Technology and Changing Demands
Keeping up with new developments
will be a challenge.
Changes in technology, process, or client needs require
training and financing to transition from the tried
and true. Budget for the inevitable or you risk being
outflanked by the competition.
Social media is changing
the entire marketing process.
Marketing and Advertising
Connecting with customers will continue
to be a challenge.
Maximizing your brand is difficult at the best of times;
unfortunately, social media is making the entire marketing
process even more problematic. Analyze your market
and decide whether the best way to reach potential
customers is: one-to-one contact, social media, online
advertising, television, radio, newspapers, or magazines.
You may find that more and more dollars have to be
spent to create a cross-media presence that provides
the same information without any guarantee of a
return on investment.
Consider a short-term contract with a marketing specialist
to review your company and its client base to help
determine the best combination of media to reach your
target market. Then, develop a plan to deploy your
advertising budget to the appropriate media.
Managing all sectors of the business
will continue to be a challenge.
Managing sales, manufacturing, ordering, marketing,
human resources and administration as well as dealing
with the considerable number of regulatory agencies
will continue to become more complex. Trying to do
everything yourself will undoubtedly lead to failure in
one or more areas.
Control your business by managing rather than doing.
Find the best person to run each particular part of the
business. Define their responsibilities with a detailed
and accurate job description and schedule regular
reports. This will enable you to understand what is
happening within the organization, solve problems and
improve operations. Have faith in your subordinates.
Red tape is and will continue to be the nemesis
of small business.
Research suggests that these compliance issues
consume eight weeks of employee time per year.
Because collecting and providing information to governments
and regulators cannot be avoided, owner-managers
should institute in-house procedures and write
manuals. Reduce the use of employee time and associated
costs by purchasing reporting software. If you do
not have in-house expertise, arrange for a third party
to prepare regular reports. Filing reports correctly and
on time eliminates the cost and stress that follows from
The size and complexity of these and similar issues will
move forward in lockstep with the business. Analyzing
each potential conflict area and developing a process
to stave off potential problems is an excellent offensive
tactic that will lessen the cost and uncertainty of moving
forward for the balance of 2017 and beyond.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.