Want to know how to prepare your business for tough economic times? There are ways to “disaster-proof” your business.
Disaster planning action items:
1. Spread your business risk. If you have a dominant customer(s) who represents such a significant part of your business that their failure would result in yours, consider diversifying your customer base. If you have a dominant supplier, consider whether they are replaceable.
2. Constantly review aging debtors and have proactive collection strategies such as offering incentives for early payment. Consider debtor insurance.
3. Ensure that you have effective customer account documentation including wide ranging retention of title clauses on stock supplied to customers.
4. Ensure that the corporate structure of your business sufficiently protects its assets both physical assets such as land, buildings, plant and equipment as well as intangibles such as intellectual property.
5. Ensure the business has good, accurate and timely reporting systems.
6. Ensure that all employees including the Principals are being remunerated properly both in quantum and via the payroll system.
7. Understand your creditor payment cycle and review reports on a regular basis.
8. Seek relevant timely commercial advice concerning your business and take the advice, don’t shop around until you hear what you would like to hear.
Robert Whitton is the head of William Buck’s Business Recovery team