Uncertainty is a constant in business, but the way you prepare for it does not have to be. By strengthening your financial overview, customer relationships and operational resilience, you can reduce risk and stay in control – even when the unexpected happens. Below, we have updated and optimised eight practical tips to help you safeguard your business.
Throughout the year, many events can impact the budget you set at the start. To keep your budget relevant, you should update it regularly. Depending on your industry, you should update forecasts for your most important key figures every three to four months – or more frequently if needed. This gives you a more current overview and the opportunity to act in time if something changes.
Do you have enough customers to make your business sustainable? Can you add value to your products or services and thereby expand your market? Invest in your existing customers – it is both easier and more cost-effective to get a current customer to buy more than to acquire a new one.
Make sure it is easy to be your customer. Stay in touch and always respond to enquiries. Ensure your customers feel heard. Often, people do not leave a supplier because of the price, but due to poor customer experience or service.
Seek out new customers similar to your existing ones. Identify your most profitable customers and try to attract more like them. Understand what your ideal customer looks like by analysing patterns and behaviours among your best-performing customers.
If your company has a profit margin of 10%, saving 1 DKK is equivalent to generating 10 DKK in revenue. If it aligns with your business model, consider sharing costs with other companies – for example, through shared office facilities, systems or procurement agreements. Use membership schemes for purchasing to access significant discounts. If you hold stock, ensure inventory levels match revenue to avoid having too much capital tied up for too long.
Prepare regular liquidity forecasts to ensure your business can cover future expenses such as salaries, investments and unforeseen costs. This helps you avoid unpleasant surprises and ensures you do not run out of capital at a critical moment. A strong cash flow overview is often the difference between reacting early and reacting too late.
Do you need accounting and financial help?
Take proactive steps to maintain and improve liquidity – for example, by encouraging customers to pay as quickly as possible, either in advance or at the point of purchase. If you invoice, send it immediately and use a short payment term, such as 10 or 14 days. Follow up with reminders as soon as a deadline passes. Have a reliable debt collection process in place for late payers. Conversely, when it comes to supplier invoices, it may be beneficial to delay payment within agreed terms.
Have you set the right price for your products and services? Identify which ones are selling best and assess whether prices can be increased. A higher margin will be directly reflected on your bottom line. Even small price adjustments can have a significant impact on profitability.
What does your business depend on? What if a key supplier’s factory burns down and you cannot get your raw materials? What if a scandal hits your industry and customers lose trust in businesses like yours? What if a competitor halves their prices? Or if another crisis like the coronavirus pandemic occurs?
Stay informed about your industry, your competitors and the broader market. Make sure you have contingency plans for potential crises. Scenario planning can help you respond faster and more effectively when disruptions occur.
Do you have the right skills in-house? As your business grows, so do the demands on your team's capabilities. Do you need to hire more staff or seek external help? Don’t spend time on tasks you lack the skills for – the results will be subpar and time-consuming. That time is better spent focusing on your core business.
At Azets, we can help you manage your accounts and make running your business more efficient and less stressful. Let us handle all or part of your bookkeeping and accounting, while you retain full visibility of your finances and key figures.
We can manage your payments, post your vouchers, and ensure your accounts are reviewed and reconciled. With our professional solution, you benefit from streamlined, digital and scalable processes – freeing up time and energy so you can focus on making strategic decisions for your core business.
Read more here
