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

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

Typically a small business is under resourced and does not have all the skills or experience required for running an efficient business.
Usually this is because someone with particular skills or a product or service idea has decided to try to make a business from it, so they mortgage their house to raise money to start the business.
However, typically the technical skills that should be used in developing and supporting the product or service  get consumed in looking after the day to day management of the business as there is seemingly no money to employ staff to do these tasks.
Often this ends up being false economy.

So what is a small Business to do?

Have a Business Plan

Without a plan of what it is you intend to do, how you intend to do it and what you intend to do with the results, including the Exit plan, how can the business consistently work towards the end goals, and know if it is progressing or not.

Once there is a plan, which doesn’t need to be anything elaborate, and all the stakeholders know what their part in the plan is, then everyone can begin working towards the goal.

There are many Business plan tools available. The trial version of this one may be useful to you for checking on the financial viability of your sales and business overall, plus prompt you to consider particular pars of the business you may have neglected.

One of the first things that needs to be sorted is the Exit strategy. What is the end goal and what happens when that goal is achieved.
Is it intended to build the business up for sale, or to provide ongoing income for the Principles, or run for a certain period and then close down etc. The Exit Strategy plays a big part in day to day Strategic planning.

Once there is a plan then the practicalities of who does what task can be sorted. This is where analysis of the economics of doing it yourself against outsourcing to experienced service providers comes into play.
If you can earn more by performing a skilled task that only you or a limited number of your staff can do, than it costs you to employ or outsource a lesser task, then it makes no sense for you to be doing the lesser task.  Make every task you do be working towards the end goal and if possible working towards making money.

Outsource Small Business Administration

Outsourcing parts of the business is generally the most efficient use of resources, both time and resources, including skills and money.

The difficulty is always convincing the owner or financier that it is more economically effective to pay for someone else to take care of standard parts of the business, while the unique skills within the business are used to best effect in the areas most suited.

The opportunity loss and sometimes the direct transaction loss of using a highly skilled person to do a job they may be less skilled at are hidden costs in the business, but are real just the same.
While the chargeout rate of a contractor or business service provider such as an accounts service may appear high, and are directly visible as financial transactions, the effective cost of not using the skilled staff member to carry out skilled work can be a lot higher.

What can be outsourced ?

These days, technology allows business to outsource just about every aspect of the operation and administration.

• Secretarial
• Book Keeping
• Creditor and Debtor control
• Accounting
• Skilled work by outworkers
• Skilled work by Contractors
• Operations management
• Sub contract manufacture
• Day to day management
• Executive management
• Strategic decision making
• etc

ie it is now possible to outsource the whole operation, a model that has been adopted in the on line internet marketing business.
This means that skills can be used where they are most effective at increasing the bottom line and progresssing the strategic purpose of the company.

Outsourcing Small Business Admininstration, both Management and Operations, is a viable option for most small businesses.

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Auckland Small Business Help

When dealing with any Business in trouble, firstly, the correct Diagnosis must be made. Without a proper diagnosis, treatment cannot begin. As Business constantly changes, reliance on strategies that worked in the past may no longer be appropriate for today’s world or business environment.

First steps for a Business Turnaround situation  are as follows:

• Diagnose the situation. Is the company really in need of a Turnaround, or is it actually still a Startup ??  Are there issues brought about by a rapidly expanding business or is a Realignment of a failing company needed?
• Determine the appropriate strategies. eg, A Turnaround requires quick and sometimes risky changes, while a Realignment normally requires new Strategies, Markets, or possibly Technologies. Realignments also generally require understanding of the culture within the business and of the people and personalities involved in order to get them to adopt and implement change.
• Use the appropriate leadership style. eg, in a Turnaround, both Stakeholders and Employees are looking for some hope, a vision, and for direction. The expectation is that the White Knight has arrived to save them.  However Realignments require guidance, the gaining of  co-operation and agreement by all parties to the need for change.

The Business Turnaround In Practice

Diagnostics of the Situation

Determine what kind of transition is required.
There are generally two transition types — Turnarounds and Realignments .

In a Turnaround, a business in crisis needs rescuing . Some of the Challenges may include:

• Rekindling enthusiasm in demoralized stakeholders
• Hard Business Decisions, need to be effective decisions and are often made under pressure
• Making Effective rather than Superficial change deep into the Company

In a Realignment, a previously successful organization needs to be Revitalised. Challenges may include:

• Convincing relevant stakeholders that change is really needed
• Restructuring management and changing the focus of the organization

Applying the Right Leadership Style

Turnarounds require strong leadership. Stakeholders and Employees require a sense of hope, a believable vision, and clear direction. In most cases the Leader will need to immediately take charge and make some hard decisions. Generally, if prospects look poor, those affected will implement difficult directives (orders)without opposition, even if begrudgingly.

Realignments require strong Guidance rather than Leadership. Consensus for the requirement to change must be developed, and the participants guided towards the right direction. This may involve providing information or data rather than issuing orders, and enabling those affected to come to their own conclusions. Those involved must take ownership of the problems and be an integral part of the solution.

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Source: Business Turnarounds

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What is a Small Business and what Help do they need ?

Small Business is traditionally 1 to 50 employees, which encompasses a huge number of businesses and business types.
From a one man band running a business from home, to a contractor doing subcontract work for a bigger company, to much larger companies employing many staff, each business type has a lot of similarities and generally only a few specific differences.

Common problems in most businesses are as follows:

• Cashflow
• Funding
  • Operating Funds
  • Cashflow compensation funds
  • Expansion Funds
• Sales
  • Sales Training
  • Marketing and Advertising
• Supplies
  • Local
  • Imports
• Accounting and Tax / GST /VAT
• Staff problems
  • Skilled staff shortage
  • Personality conflicts
  • Productivity

So how is a small Business going to address these issues of administration and management ?
Getting help requires overcoming some issues in itself, before the real issue is addressed.

1) the business needs to recognise that it needs help in some area

2) the business must commit to providing time and probably money to address the issue.

3) the business needs to be willing to listen to outside help and be willing to act on the advice.

Once these issues have been addressed, then the task of finding relevant help for the Small business begins.

Methods of Help can range from employing Consultants, to training or re-assigning tasks within existing staff, to self help type programs or courses.
There are many Free or low cost self help courses available from local training institutions such as after hours school. There is also a huge amount available for free or low cost on the internet.

Outsourcing Small Business Administration, from all areas, Management to Operations is viable with the availablity of Small Business Consultants for the individual areas, whether it be Strategic Decision making, day to day Administration or Management, dealing with financial difficulties, or Human resources issues. There is Help for Small Business when  the business is ready to ask for it.

1. If you need high quality and confidential advice for your struggling business!

2. If your business is suffering from your customers paying slowly!

3. If you personally feel stress because your business is under stress!

4. If your business administration is lacking!

5. If your business needs restructuring!

6. If your staff are not performing!

7. If you can’t see the true profitability of your business!

8. If you have a good business but you want to improve profitability!

9. If your marketing isn’t working that well!

10. If your cash flow isn’t working!

GET HELP NOW

Small Business Help