As over-indebted consumers reduce their spending, entrepreneurs are facing increasingly challenging circumstances.
A whopping 90% of entrepreneurs surveyed in a new report said that business was tough, with several saying they were taking pay cuts just to survive.
The Retail Capital Roll with the Punches report surveyed over 700 entrepreneurs.
According to the report, SMEs must work smart and make changes if need be, because it is not “business as usual”.
Retail Capital CEO Karl Westvig has 10 tips for entrepreneurs wanting to move “from panic to profit”.
1. Speed up cash flow
Speed up your inflows by having arrangements with bigger clients. If you have corporates or bigger companies on your book, ask for preferential payment terms and try to convince them to support you as an SME, as it is really their responsibility to assist.
2. Protect cash flow
If you can, reduce expenses and look at your overheads. Don’t get caught in the trap of a few consecutive months of overspending which could become the norm.
3. Build a data bank
This is a valuable asset for you, as it opens up new channels of funding. One of the biggest constraints for SMEs is funding.
If funders have data that is reliable and gives a track record of how the company operates – trading patterns, turnover levels, card vs. cash – this information can be leveraged to gain access to funding.
4. Know your funders
It is up to you to position your business in a way that speaks to the funders’ requirements. Importantly, there are also different funders for different stages of the business’ life cycle.
Get involved with an entrepreneurial community that is on the same journey as you, but not necessarily at the same level. Find one that exposes you to more mature businesses from whom you can learn.
6. Change direction
If you have a bad business model or it isn’t working, change direction. There is no straight curve, and it’s important that business owners understand that.
A tough market provides the opportunity to re-evaluate what matters to you as a business owner and your clients. You need to understand what’s most important to ensure that what you are offering stays relevant.
8. Embrace digital
More and more people are buying online and doing comparisons, so the more you embrace the opportunities that these online channels present, the better. There are plenty of tools available online – you just need to do some digging.
Having a positive attitude is essential. See the opportunity among the challenges and look for those gaps. You also need perspective when you face the challenge of rising costs, tighter margins and lower demand.
It can all be seen as an existential threat and you might want to put your head in the sand. Or you can process it and take it up as a challenge.
10. Be nice
People will do business with you if you’re a nice person, grateful and forgiving.