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CD 1045 - 52pp Text 21/8/08 13:20 Page 18
Put the kettle on ….
Don’t let the credit crunch crush
your courier business underfoot
Tim Gilbert suggests a few measures to
recession-proof your courier business
It’s been nearly 20 years since the last By boosting your cash situation like this,
full-blown recession here in the UK, and you’ll give yourself more time to fix the
although some economists are still saying profitability crisis if you have one. Fixing
there’s only a 50:50 chance of another the profitability problem will, in turn, feed
one, it feels like the right moment for any through to fix the cash problem. Take a
business owner to be taking sensible look at each component individually:
precautions at this time of uncertainty.
Prices. Review every customer for price,
How is your business going? Are you gross margin, and credit risk. Look for
seeing customers spending less and customers that aren’t delivering, and put
asking for downward price reviews? Are their prices up aggressively.
your couriers asking for more per mile?
Margin. You need gross margin to pay
Are your customers taking longer to pay
your overheads. There are only two
you, or even going bust? Are you
things you can do to improve it: raise
struggling to pay your bills on time?
prices or lower delivery costs, or both. To
These, clearly, are the warning signs that
lower the cost of delivery, you may need
you’re operating in a less forgiving
to look at a different way of getting the
business environment, and that action
work done. If you can’t get to a point
may be necessary.
quickly where the work delivers margin,
Regular, up-to-date and accurate financial lose the customer.
information is the first priority. Up-to-date
Overheads. Cut them. The great thing
means no more than a month old, and
about a business crisis is that it gives you
you need to be able to identify sales,
the pain than to lose the business. The
a much freer hand than you usually have.
gross margin, and overheads. Ideally you worst pain for you may be to face having
Would you rather see your business go
need a graph showing you the year-to- to tear up everything you have been
onto the rocks under full sail, or make
date, so that you can see the trends. You saying for ten years or more, and
tough cuts in its expenditure? Tough cuts
don’t want to go mistaking a normal adopting a radical new approach to your
often means the ending of pet projects,
seasonal dip for a crash in the economy. business. Take professional advice to
or the departure of long serving people,
From this you’ll be able to see whether ensure that your plan is within the law,
or the ending of nice numbers, or even
you’re profitable or not, and if you’re not, especially employment law, and that you
the dumping of sales teams and their
what action you need to take. Even if you get to hear about any options you may
ambitious growth targets. This is when
are profitable, it’s worth reviewing your not have thought of.
crisis management really tests you as a
business for vulnerability.
Next priority should be a review of your
business leader. Whatever has to go, has
Usually, there is a profitable business cash position. Get your accountant to do
to go now. Inaction and indecision are
hiding somewhere underneath an you a cashflow forecast. Running out of
common reactions among owners when
unprofitable one; you just need to take cash is usually the first problem to hit a
businesses are in trouble, often leading to
the right action, and quickly enough, to business when times get tough, and a
the unnecessary death of the business.
reach it. The right action may involve forecast will predict the moment this will
painful decisions, especially for you and happen. It’s usually when the VAT is
Investment. In the good times, you may
your staff, but it’s always better to face payable. To avoid running out of cash,
have been able to take money out of the
you’ll need to be on top of your credit
business. In the bad times, the bank, or
control, which means daily effort to get
arithmetic, may dictate that you have to
paid. You’ll also need to keep your
put some back in to enable the business
lenders and bankers on side. Talk to them
to continue to trade. Of course, this is
before they talk to you. Before things get
often just when it’s hardest to come up
really tight, start trying to sell anything
with the money, especially with the
you don’t actually need to survive. Every
current mortgage freeze. Line up your
penny counts, so put that old pallet truck
personal financial options in good time.
on eBay, or sell the small growing If you’re running a big business, choose
customer base you’ve been building in a your crisis team ruthlessly. The team
nearby town. should be small, and made up of your
18 Courier Direct FIRST FOR NEWS & VIEWS
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