Small businesses that stress test their business by planning for disaster and uncovering problem areas will be more likely to survive the financial crisis, says business recovery expert Robert Whitton.
According to Robert Whitton, head of William’s Bucks Business Recovery Team, if small businesses “plan for disaster” then “it will never happen.”
Whitton believes that in tough times businesses need to understand how they would be impacted by an economic downturn on a ‘worst case scenario’ basis, to be able to take appropriate defensive action.
“As a first step, financial and management reporting systems must be capable of providing reliable and up-to-date information to highlight potential problem areas.”
Whitton believes this will ensure businesses can get an “accurate picture of how they might withstand a material loss of revenue or how flexible they are to adapt quickly to change.”
Mr Whitton also noted that there are a host of early intervention strategies small businesses can use to improve value and performance. These include undertaking basic cash flow management and regular debtor and creditor reviews, as well as restructuring the business or its finances and eliminating loss-making activities and assets.
“Early detection of potential problems followed by swift, effective action is critical to ensuring that businesses not only survive but trade successfully through the downturn.”
People who read this, also liked:
Stress Test for SMEs under financial strain
Remodelling your business finances to survive the downturn