Auckland Small Business Help

First Steps to Helping a Small Business that is having Trouble

With any Small Business that is finding times hard in this economic environment, there are some fundamentals that make up the starting blocks of recovery.

Cashflow

Preservation of Assets

Reduction of Liabilities

Develop a plan

Cashflow

“Cash is King” and is particularly so when a business is struggling.

Take a close look at the cashflow:

Where is the money coming in from and where is it being spent.
The old 80/20 rule is useful in these examinations,

Income
80% of your income is probably coming from 20% of your customers- so concentrate your efforts on them.

Can you increase your sales by presenting a particularly attractive offer to your existing customers ?

Can you get referrals from your existing customers by offering them an incentive to bring in new customers ?

Instead of spending your advertising on blanket adds, can you spend money directly on existing customers to get more sales,

If you use advertising to bring in customers, look closely at how effective it is – can it be measured, can you reliably say $1 spent on this medium will give me $x worth of sales ?

If your cost of goods /production has gone up, have you increased your sale prices to reflect it ?
If the market can’t take a price increase, can you package something else with it as a cross sell or up sell, that will give you better margin (the classic “Would you like Fries with that ?”, “Would you like to upsize that drink ?” )

Expenses

80% of your expenditure is probably coming from 20 % of your creditors, & the chances are that the Banks or finance companies  are one of the biggest.

Can you reduce your borrowings by using the income to pay off debt rather than your own wages or “luxuries”.

Cut back on anything that is not involved in the money making process (except insurance)
ie make sure every dollar spent is moving towards getting another dollar back from a sale.

If you rely on advertising, don’t cut back on the dollar value, but take a close look at how or where you are spending it. Target your advertising dollar.

Can you do a joint venture with your suppliers where they put up some money or resources for a promotion or supply their product at a discount, ie reduce your input costs and increase your sales at the same time.

Preservation of Assets

Do what you can to ensure existing assets are protected from being lost to a firesale or creditor action.

Talk to your Accountant or Lawyer.

Reduction of Liabilities

Do what you can to reduce your Liabilities, either by selling assets that are saleable, or finding other sources of funds such as investors rather than Bank or Finance company borrowings.

Carefully assess what the income is currently servicing.
Is there lots of high credit card debt or penalty overdraft debt that could be reduced by restructuring  loans or consolidation, ie increase loan on house at 8% to pay off credit card debt at 22%

Look at the Business Holistically and Develop a Plan

Decide on how the Business is going to move forward from the current situation and write at least an overview plan.

Can you make more in the end by spending a little more in one area, rather than insisting that every area cuts back to the bare minimum?

Will  you trade at break even levels for a while – turnover at breakeven is better than no turnover at all.

Most importantly- make sure the staff are with you and that they understand what you are trying to achieve.
If all they see is cutbacks, they will begin worrying about their jobs and productivity will fall.
If they see there is a plan and that they have an input into the viability of the Company (with possibility of reward also) the plan is more likely to succeed.

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Small Business Help

Outsourcing Small Business Management in Auckland

Is it possible to Outsource Business Management for a Small Business in Auckland ?

The Answer is of course yes it is not only Possible, it is also Practical and sometimes Preferable.

A typical small business will grow around the particular skills of some individuals, or around the development of some type of product.
The skill set required for the product or service are a very different skill set to those of a good manager.

Generally the Product or Service will require technical skills such as design, product or service  knowledge, manufacturing skills etc

The skills of a Business manager are quite different.
While an awareness of the product or service is important, the skills required of a good Business Manager are Financial and People skills.

The Financial skills are required to understand and provide overall guidance on the Financial direction of the Business, after all, that is generally the purpose of the Business, to Make Money.

However more importantly, it is the people skills that are required in order that the high level vision and direction of the business is implemented by those lower down the chain.

Without the workers, Management is out of a job, and probably has no business.

Quality Business managers are Leaders, and they create leaders below themselves in order to get everyone working together on the same goals.

Frequently the Technical skills and the Leadership skills are at opposite ends of the Skills Spectrum, so a successful business owner would be wise to outsource those skills the business doesn’t currently have, from someone experienced with those skills.

Generally this will not only be more effective in terms of creating an efficient small business, but may also be more cost effective  if the management tasks do not require a full time person. This is often the case when a business has a lot of skilled staff that simply need to be pointed in the right direction, as they are competent at what they do, but need the guidance to ensure they are working towards the overall business goal.

One of the biggest mistakes a business can make is to take a skilled worker and put them into a management position, for 2 reasons:

If they are very technically skilled, then they are probably not a people person,

and while they may have many years experience at their skilled roles, they may have little experience in management.

Outsourcing management services are now commonly available in the same way that outsourced Accounting or Bookkeeping services have been available for years.

Technology has provided rapid communication mediums such as mobile phones, email, video conferencing etc so the process of outsourcing Small Business Management has become even easier.

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Auckland Small Business Help