Turning Around a Business

Turning around your business

As many small business owners know, this is a difficult time for businesses and there are many small and larger businesses failing every day.

If you run your own business it is essential that you realise that there is a risk that your business may fail and that you act on reducing this risk while you still can so that you can turn around your business and keep it at least secure and profitable even if you cannot grow it in this economic climate.

Admit that there is a problem

It is not easy for a business owner that has taken many years to grow their business to admit that there is a problem and that the business is in trouble. It is very easy to bury your head in the sand in the hopes that it will all go away but the first step in turning around your business is to admit that there is a problem.

Take action

As a business owner you have a vested interest in the business, after all you have invested time and money into it, and turning your business around should be top of your list of priorities.

Some of the things you will need to do will take time (for example cutting costs, talking to suppliers to try and get better terms and rates, diversifying into other area or even making staff redundant) so it is important to take action as soon as you have decided what needs doing – that is not to say that you should rush into things and have a knee jerk reaction, you have spent years building your business up so a few days of careful consideration is called for.

Options

Some of the options that may be available to you include:-

• Increasing your profit – if you are loosing money on a deal why carry on with it, a turnover of £10 million is no use if your costs are £11 million. Concentrate on the deals where you are making money (of course as a business owner you know which those are don't you?)
  
• Chase customers for quicker payment of their debts to you. If payment terms are 30 days start asking for confirmation that the payment will be made after 20 days, try not to let the debt go past the due date – you are effectively lending your customers money when they buy on credit from you so why let them borrow it for longer than they need to ?
• If you need to, consider active business debt recovery, don't just sit back and think that people will pay you.
  
• Keep control of costs, even down to small items – for example, it may be nice to have top of the range coffee for staff and visitors to drink but why not save money and buy own brand coffee. This works across the board, look at everything you purchase and ask if there is a cheaper option that will work just as well.
  
• Talk to the bank or other lenders about trying to restructure the finances so that you reduce interest payments.
  
• Talk to your accountant about tax savings that may be available, if you do not have an accountant, or you are unhappy with your current accountant, find a local accountant by using the internet or talking to friends.
  

Remember that to turn your business around successfully will take time and effort and may involve some heartache (especially if you have to lay off staff) but the longer you leave it the higher the risk that you may well not be able to rescue your business in time.

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