1. Face the truth: If you can’t be honest with yourself and your team about your situation and must insist on living in the past, your chances of winning through are greatly reduced. Adjust your habits for the age of austerity.
2. Don’t panic! Business life is a roller-coaster ride and you didn’t buy your ticket for the slow comfortable climb to the top. It’s the adrenalin-soaked descent into the unknown that defines the entrepreneurial ride. So, keep faith with your big idea and aims, hold on tight, and remember to enjoy the changes of pace.
3. Avoid crass cuts: The muppet in you will want to cut staff benefits, reverting to the kitchen tap and cancelling the water coolers. But ask yourself if panicking your team is really the best approach to getting the necessary return from your biggest cost? Best to cut once and deep enough to not have to keep the knife sharp.
4. Don’t hide away: As appealing as it is to think that cutting your marketing spend is a good idea, does it really make any sense to speak less with your customers just when you are more dependant than ever on them for your profits? Austerity is made for marketing, so make every penny count but keep your spend up.
5. You won’t save your way to success: Remember that a business is a vehicle for investing capital and labour in ways that create value. It’s all about return on investment, so do all you can to stay focused on investing in tomorrow’s profit cows.
6. Avoid cash-limiting customers: When funding was plentiful, collecting your bills on 90 days only set you back the extra 60 days cost of credit. But with a fixed credit line, it now seriously limits the business you are able to take on by a massive two-thirds. Slow payers can seriously damage your growth when liquidity is hard to reach.
7. Think before you buy: Don’t buy what you can lease, lease what you can rent, rent what you can borrow, nor borrow what you can find in a skip. You’ll be amazed at how much of what you used to buy doesn’t really need to tie up your limited funds.
8. Be patient: It’s too easy to make cuts in haste and repent at your leisure. Chopping off a leg helps rapid weight loss in the short run, but it has major implications for the rest of your life. The same applies to your business. Anything that cuts straight to the bottom line needs careful scrutiny for the hidden opportunity costs.
9. Worry about the right things, not everything: Focus hard on your cash needs but don’t be spooked into locking more cash away than you need. In the normal run of business you need to wash your cash quickly through the business and make it work hard for you, so don’t hoard it under your bed.
10. Don’t drive blindfold: Know and track your five key numbers inside out and place them in full view of all the team in a refreshed dashboard kept at eye level. Make the fuel (cash) gauge larger, and the rev counter and speedometer less dominant. Your reputation gauge should figure large, and remembering business to be an endurance race not a sprint, keep a very close eye on the battery level of staff morale.
Alex Pratt is founder of seriousreaders.com and author of the new book Austerity Business: 39 Tips for doing More with Less, available from Amazon.
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