Small Business Matters

New year, new start – tips for a successful 2012

Firstly we’d like to take this opportunity to wish all our readers a very happy new year from the SmallBizMatters team. Here’s to a great 2012.

Today’s post is by Clive Birnie, managing director of Severn Delta, the company behind the Sarah Smith cleaning products.

So here we go, heading into 2012.  This time of year seems to lead inevitably to a mental audit.  I can’t do much about your willpower for your New Year’s diet but here are my suggestions for good New Year’s resolutions and ways to improve your business this year.

How to avoid a Christmas cashflow crisis

Sorry to mention the C-word so early but it is December now so we figured it was OK…

While many of us wonder if the run up to Christmas could get any longer, proper preparation can make the period truly relaxing.

This is particularly true for your business's cashflow. Many companies, especially those experiencing their first Christmas period, can be caught completely unaware by the impact that Christmas can have on their cashflow. However, there's still time to ensure this doesn't happen, as long as you start planning now and follow a few simple rules.

Who is taking responsibility?

Should you ever ditch a client?

If you’ve ever struggled with the idea of ditching a client, take comfort in the fact that you aren’t alone. Even if it’s the right decision for your business, it can feel like you’re betraying the values of loyalty and commitment that lie at the heart of your company.

There are occasions when it’s necessary, though. The Pareto Principle states that more often than not 80% of sales come from 20% of clients. If this sounds like you, you can probably afford to ditch some clients.

However, deciding whether to ditch a client or not isn’t just a question of profits. 

Before you act, consider the consequences

Ten tips on keeping cash flowing when staff are on holiday

Now that the holiday season is upon us, the Institute of Chartered Accountants in England and Wales (ICAEW) has provided some helpful tips for SMEs on how to cope while staff are away.

Clive Lewis, ICAEW’s Head of Enterprise, said: “At this time of year when employees will be taking their holiday it is essential that firms plan ahead to ensure business is not disrupted. With economic prospects still difficult, firms must plan ahead to avoid disruption. They must ensure that cash is kept flowing by examining their debt collection and bill paying procedures as well as making sure proper safeguards are in place."

The ICAEW gives the following tips:

Video: Tips for succeeding in a recession

Pernille Brunn-Jensen, Managing Director Global Small Business at Intuit UK, discusses top tips for small business owners to survive the recession. Pernille responds to the question: *What step can small businesses take to help themselves?

Late payments continue to hurt small businesses

According to Barclays Local Business’ annual Late Payments report, there has been a 20 per cent rise in late payments, forcing UK small businesses to write off £4.8bn in debt. The figure is up £1.7bn on last year and has meant that small businesses have lost out on a staggering £5bn over the past 12 months. Furthermore, they are owed more than £10bn in outstanding payments on any given day due to suppliers or customers failing to pay on time.

Poor payment practices have long been a thorn in many a small business’ side but the report highlights just how widespread the problem is becoming. Nearly three million small businesses (around 60 per cent) have experienced problems with late payments, representing an additional 850,000 businesses compared to last year. While a rise in late payments is expected during an economic downturn, these figures are still worrying and inexcusable. Small businesses are trying their hardest to get by in the current recession but approximately a third of the organisations surveyed by Barclays (32 per cent) admitted that customers or suppliers failing to pay on time threatened their day-to-day survival. That is because payment is crucial to a company’s cash flow and if not received on time or promptly, it can have a significant effect on the functioning of that business.

Are banks lending to small business customers?

A recent report from the British Bankers' Association (BBA) shows that the main UK high street banks have increased their lending to businesses, both to their existing customers and to customers of other lenders. The level of lending to small businesses rose by £271 million in March, deposits by small businesses increased by £881 million and there were over 52,000 new small business banking relationships established in the month.

This is great news from a small business perspective, as credit difficulties have been top of the agenda for several months. However, in contrast, a recent article in the Times stated that Mervyn King, Governor of the Bank of England, had identified the behaviour of the banks as one of the key reasons that economic forecasts are so uncertain at the moment. The Bank of England’s Inflation Report shows that in two years’ time it is quite possible that the economy will have grown at more than 3 per cent over the previous 12 months, but it is equally possible that it will have shrunk. This unpredictability will be particularly unnerving for lenders.

Top tips on credit management – Part 2

As mentioned in a previous blog, good credit management is essential to any business and no company can afford to not take it seriously, especially when the availability of credit is tight. The final section of our basic principles of credit management is outlined below:

Ensure invoices are correct - A disputed invoice will not be paid so avoid giving the customer any excuse to contest the invoice. This requires accuracy such as clearly specifying the goods or services being paid for and being sure to quote the customer order number.

Top tips on credit management – Part 1

Good credit management is essential to any business and no company can afford to not take it seriously, especially when the availability of credit is tight. Recession or no recession, any business can compete and even grow just by adhering to a few basic principles of credit management outlined below:

Get to know customers - Check the exact name and legal status of each customer and credit check new customers where possible. But do not simply rely on credit ratings, ask for references from other suppliers and assess the customer’s propensity to pay.