Surviving the Current Financial Meltdown

Current Financial Crisis

In the current climate of near certain worldwide financial meltdown there are many who will not survive. There are some who will not only survive but will benefit from the misfortune of others. However for the majority it is a question of surviving and getting through it. If your business is on a sound financial footing and you have money in the bank (Providing your bank is not one that has gone bust!) then this will be beneficial in the coming months. So we are back to good old cash flow and monitoring.

You may even be able to reduce employee salaries for a period of time, rather than redundancies, with a promise of bonuses when things recover. This is what JCB in Britain have done recently.

Tighten your Belt – No need for fancy spending

Cut out unnecessary spending, no perks on the business such as dinners to woo customers. They don’t need it and they will appreciate you being prudent if it means you stay in business and continue as their valued suppliers.

Managing directors show the way by paying yourself less and tighten your own belt. There is nothing worse than asking other people to manage on less when you don’t yourself.

Avoid buying anything unless you absolutely need it. It’s amazing how you can manage without for a period of time using up existing stocks and making sure that waste is reduced to a minimum.

Look for bargains in purchasing.

When you do have to purchase goods to run the business, make sure you look out for bargains or negotiate for a better deal than you may have achieved previously. When times are tough, sales with no profits are better than nothing and there are some good deals to be had. One company I recently heard about sold a house for half the price when a customer came along with a cash offer.

Do your customers have financial stability?

Find out the financial viability of your best customers. When the income of a customer falls then their ability to purchase goods and services is affected. If they are able to pay, then you will be able to pay your suppliers. One of our customers a Planning Consultant had a very large customer go into liquidation owing about £10,000. This was a lot of money to lose, but he survived because his business was very healthy with good cash flow.

Try not to borrow money

When the world is in a financial crisis it is better not to borrow money if you can help it. If you have already borrowed significant sums of money then make sure you talk to your bank and get the best deal on repayments you can. If it’s possible to repay a chunk of money do so to reduce the interest you are paying out. To me interest is money Down the drain and this is not good money management. Having said all that, the interest rate in America is just over 1% and recently rates have been radically reduced in the UK. But that in itself is what caused this whole financial mess in the first place. People borrow money cheaply then re-lend it at a higher rate of interest and take the difference in profit. Once the interest rate rises to a more normal level they will bail out and take their billions off to buy an island somewhere while everyone else pays the price.

Stay in a positive frame

By this I do not mean be in denial and pretend the world is not going through a financial challenge. But if you are continually thinking and worrying about the negative aspects of the financial situation, then you are likely to make it come true. Don’t forget you get what you wish for and by concentrating on something then it will work like a wish, so why not concentrate on ways of getting new customers, giving better value to your existing customers and how your company could offer new products or services to your existing customer base?

You only have to survive

The world financial situation at the moment, I realise, is much more complicated than is indicated above. But the simple ways of dealing with crisis can often be the best option. Cut everything down to the bone and think about the days when people did not have such complicated lives. They managed their businesses without a web designer or a water cooler. In the past there was no such thing as glass recycling and look what the Victorians did with the limited resources they had at their disposal.

Conclusion

Now I am not suggesting that we should go back to the good old days. What I am saying is that we might think we can’t manage without all our latest gadgets but the reality is that we can do more with a great deal less, as long as we put ourselves into the right frame of mind and think positively about what we can achieve rather than what we haven’t got. Good luck for a healthy future.