A recent survey by Hampshire Trust Bank (HSB) shows that small business owners have increased their cash holding by 78 percent in their business current accounts in the past two years, in anticipation of another credit crunch brought on by Brexit.
UK manufacturing businesses, both large and small, have already been stockpiling raw materials ahead of the original Brexit deadline back in March this year and have started doing so again, with the new Brexit deadline coming up fast at the end of October.
The need for surplus cash to buy supplies for stockpiling was the main contribution for the increase in current account balances, according to the HSB research.
How can you recession-proof your small business?
Protecting cash flow is certainly one good way to buffet yourself from unexpected and nasty surprises and to keep trading in an uncertain trading environment. Unfortunately, small businesses are particularly vulnerable to tough economic times as they often don’t have the reserves to help them.
Other ways you can plan to protect your small business could include reducing inventory costs or a good inventory management process, without of course sacrificing the quality of your goods. For example, are you ordering too much of a particular material or item? Can you source an item or material from a cheaper source?
A strong inventory management system, as well as strong handle on your cash flow, could make all the difference in a difficult economic climate. Just because you’ve always ordered something from a particular supplier or have always done things in a particular way, doesn’t mean you are working as efficiently or as cost effectively as you could.
Your customers are the centre of your universe
It is at difficult economic times that customer relationships are really put to the test and show their worth.
Never underestimate the value and quality of your client relationships as a loyal customer will stand by you, even in the most difficult economic times. We’ve all heard the old adage that a bird in the hand is worth two in the bush. The bird in the hand is your customer or client and he or she is an opportunity to make more sales without incurring the costs of finding a new customer.
Furthermore, it is 80% easier to cross-sell to an existing customer than market and source new customers. If you want to recession-proof your business, you can’t afford to ignore the potential profits of shifting your sales focus to include established customers.
Southside Accounting can help
If you are a small business owner looking for support to grow and stabilise your costs and increase cash flow, Southside Accounting can help, providing accounting services and sole trader services in Wimbledon.
Southside Accounting are your local cloud accountants in Wimbledon and London. We’re local, like you. And we’re a dynamic small business. Just like you.
We are fully chartered, certified accountants so we’re well qualified to be the trusted advisers you need to help make your company a success.
All our clients are on the cloud and have access and support on cloud accounting software, in both QuickBooks and Xero.
Our fixed fee structure means there are no surprises. And our smart Service Plans are tailored to meet the particular demands of your business.
Call us to book a free no-obligation meeting today.
We always offer an initial free face to face meeting with prospective clients, so we can get to know you and your business and understand your unique circumstances and business goals.
Written by Shaima Todd.