10 Tips for your Practice
- Complete work, bill it and collect it. Do this quickly as “cash is king”. Consider deferring non-essential capital expenditure to later periods. Protect and preserve your cash and you will have gone a long way to mitigating the effects of the current recession.
- Look after your existing customers and clients. Do all that you can to ensure they have no reason to call into question the service they receive and why they should not move their business elsewhere.
- Measure, monitor and make changes. Make sure your management information is up to scratch, that it is coming to you on a regular and timely basis, not once-a-year nine months after year end. You can only make sensible decisions about “in year” changes if the information comes to you “in year”.
- Take the difficult decisions on costs, if need be. This can mean with people. Headcount may have to be cut however difficult this may be. Keep other significant expenses (e.g. rent, insurance cover) under review as well. There may be scope for negotiation over such costs.
- Put aside personal agendas. If firms are to survive the owner managers must recognise and pre-empt problem areas of the business even if the personal impact on them is unfavourable.
- Stay in control. Take sensible measures early even if these involve difficult decisions. The consequences of doing too little too late may well be too unpalatable to contemplate and undermine the longer term prospects of the business.
- It can be good to talk. If you are running into difficulties it may be useful keep certain key creditors informed. Some creditors may be sympathetic to requests to extend payments terms rather than risk losing a customer. H M Revenue & Customs are listening to requests to extend terms over tax bills, but you must speak to them first.
- Be prepared to negotiate hard with bankers or, if need be, find extra capital to inject into the business. Banks are reluctant to extend unsecured facilities currently and may well look for other security or even call in loans. Be prepared and consider what “war chest” funding is available to get the firm through a difficult trading period.
- If you are still operating as a general partnership, consider converting to limited liability. Where you decide on the LLP route or the limited company route this is not a quick fix. It is a preventative measure for the future. Nonetheless it may provide comfort and facilitate cohesion between owner managers in a business as they ride the current recessionary tide.
- Property. If you own freehold, consider mortgaging it to raise cash. If it can be sold consider a sale and leaseback arrangement. If you are in leasehold property, look for when break clauses can be exercised. Even consider surrendering the lease and moving to smaller premises if need be. If you have rights to sub-let excess space, consider this as an option.
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