5 Tips for Business Survival in Times of Uncertainty

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Can you remember that small window of time when the turmoil caused by the Covid pandemic seemed to be ending and there was the prospect of ‘economic calm’? Sadly, it didn’t last long, as Putin then waged war with Ukraine.

Since then, the global economy has been thrown into even greater uncertainty and instability. Post Covid there are still supply chain difficulties, exacerbated by continued Covid restrictions in China and war in Ukraine, and sanctions against Russia have added to the huge rises in energy costs. All these factors have resulted in projected inflation at 10% or more in the UK by the end of the year, leading to predictions of a UK recession in 2023.

This backdrop of uncertainty is causing real problems for businesses in all sectors, no matter how large or small. The companies that will flourish are the ones that keep a keen eye on their performance on a day-to-day basis. In this environment of constant change, it is vital that you are able to react quickly to rising costs, whether that be changing supplier or increasing the sales price of your products or services.

Rising costs are likely to cut profit margins. Your customers will also be feeling the financial strain so may be delaying payments. In the coming months cash will be king!

5 key ways to aid the survival of your business

1. Understand your cash position

Turnover and profits are important, but knowing what your cash position is helps drive decision making and can be the difference between whether you survive a crisis or not.

If you have not prepared a cashflow forecast before, click here to download our useful 13-week cash flow forecasting tool, and add in the expected payments from customers and the supplier payments that will be due during the period. Monitoring cash receipts with a short-term cash flow forecast will help you to establish the cash requirements over the next few weeks and months, and help you deal with any delays in the supply chain.

2. Stay on top of your debtors

It is vital to monitor your debtor book. Any overdue amounts must be chased immediately. Consider putting the customer on ‘stop’ if they are late paying. This sets an expectation that you need to be paid within the agreed terms. It also ensures that your exposure to a company that may be insolvent doesn’t get too great. In times where you may be supplying a product that is scarce, then you may even be able to negotiate an upfront deposit.

3. Examine all your costs

In times of economic uncertainty cost control is vital. Go through all your costs line by line to see if each cost is required to achieve your turnover. One thing that we have learned from the Covid pandemic is that certain costs such as transport to team meetings, are not always necessary. Take advantage of Teams or Zoom meetings to get your staff together. Also, the time saved in unnecessary travel can be used much more productively.

4. Manage your creditors strategically

Always try to negotiate the best payment terms with your creditors. If your cashflow projection shows a shortage then communication with your suppliers is vital. If you have to postpone a payment then always try to keep to your revised payment plan. This helps to retain your credibility with your supplier.

5. Get rid of outdated or excess equipment

Yet again, you must cast a critical eye over all your equipment. Is it necessary to maintaining your turnover? With so many holdups in the supply chain for capital equipment you may be able to sell items at a premium.

Alternatively, in order to boost cashflow it may be worth considering leasing rather than buying assets. This would give you the opportunity to have the latest technology. Hopefully this will drive operational efficiencies which can add to your profits. They may be more energy efficient - an important consideration these days.

In summary

The delays to the supply chain and general uncertainty will likely have an impact on most business’ cash position. Monitoring your cash position and looking forward will help you to ascertain whether you need additional support, either in managing your cash or in reviewing your working capital requirements.