The media is full of scare stories about the impending Credit Crunch and the impact that it is likely to have on small business.  As a small business owner, you need to make sure that you are prepared for any consequences this economic climate is likely to have on your business. 

In this Credit Crunch focussed article, NFEA (the National Federation of Enterprise Agencies) shares some tips on how to make sure that you and your business are ready and able to deal with these difficult economic times.

1. Focus on your customers:
•    As the economy slows, existing customers may not buy from you as frequently as before or as much, and new customers will be harder to find.  Your sales turnover will come under pressure. It is easy in times like these to take an axe to your marketing budget but you should resist the temptation to cut back on your marketing – it is more important than ever.  You need to make sure that potential customers still know about you. 
•    When budgets are tight, existing customers are more valuable than ever. It’s easy sometimes to take existing customers for granted and concentrate on new and prospective ones. But customer loyalty should never be taken for granted: it comes into its own when times are hard.

2. Be aware of your finances:
•    In this current situation, it may be that your debtors will be slower to pay, and your creditors will be pressing you for payment.  Your cash flow is likely to come under pressure.  Review your projections now and make sure they still hold water in today’s conditions.
•    Remember that the likelihood of bad debts will rise: make sure your credit references are up to date and your debtor control operation is sharp.

3. Look at your suppliers:
•    You may come under pressure from your suppliers on your costs.  Remember you don’t always have to accept price rises.  It may be worth negotiating or suggesting staged increases.
•    You should look at your costs rigorously as well. It’s easy for a bit of fat to creep in during the good times but in most businesses, with the right attitude and a red pen, you can cut a fair amount out of your cost line.  Can your utility bills be reduced by switching suppliers?  Are you incurring travel costs unnecessarily?
•    Look at each line critically - you will probably be able to make worthwhile savings without damaging your business.  If you have employees, ask them for their ideas.

4. Maintain a good relationship with your bank:
•    If you have got a good business and a good business plan, which recognises the risks you face and builds in sensible contingencies, the banks will look to work with you.
•    If you find life is getting difficult, I would always advise talking it through with your bank in good time. There is nothing worse for your credibility than ringing up in a panic for an emergency rise in your overdraft.
•    If you keep the bank advised, you are likely to find them much more constructive if you need to call upon their help.

5. Don’t face it alone – take advice
•    There’s nothing worse than feeling as if you are handling business pressures alone.  Remember that there’s a huge array of business support and advice available for you take advantage of.  Key support comes from the NFEA network of enterprise agencies - local, not for profit organisations set up to provide dedicated business support to new and growing businesses. 
•    With over 120 enterprise agencies in 200 locations throughout England, there’s probably an agency in your local area.  To find your nearest Enterprise Agency, visit www.nfea.com.  Details are also available online for business support contacts in Northern Ireland, Scotland and Wales. 

But do remember that the nature of business is that you never know what is round the corner – and that is partly its fascination. There may be good times; there may be ‘not so good’ times. With a bit of focus and a realistic and practical approach, there is no reason why you can’t handle the current situation and come out of it at the other side with a better managed and stronger business.

Content provided by NFEA (National Federation of Enterprise Agencies)
NFEA is a network of independent, not for profit local agencies committed to responding to the needs of small and growing businesses by providing a comprehensive range of support services.  Find your local Enterprise Agency at www.nfea.com

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