? EDITOR ’ S QUESTION //
YOU HAVE A CASHFLOW UP AND RUNNING ,
YOU ARE MONITORING
AND YOU ARE REALISTIC IN YOUR
A cross the UK , SMEs are struggling with the enormous pressures resulting from the current cost of trading crisis , with many finding it difficult to find the right source of financial advice or funding .
Our latest # CostofTradingCrisis campaign highlighted the three biggest concerns and challenges for UK SMEs as energy and utilities , staff and fuel costs .
With a recession declared at last year ’ s autumn budget , businesses are having to think creatively and innovatively to ensure they meet the needs of customers and that their business model and finances are sustainable .
My first , and strongest piece of advice , is to build resilience into everything you do . Business resilience is the ability to ideally avoid issues and crisis and being able to mitigate the impact of them if they do occur .
Being prepared is crucial . We can ’ t control rising interest rates or inflationary pressures , but we can build resilience into our business to tolerate these . My advice is to take a step back and carry out an honest review of several areas of your business including :
• How secure are key resources ? Do you have critical equipment nearing end of life , do you have key people that you really need to retain ?
• Do you have the most advantageous commercial terms in place with customers , suppliers or finance providers and is there an opportunity to renegotiate to improve your cashflow or working capital ?
• What ’ s your sales pipeline or order book looking like ? What if 20 % of what you thought was going to happen doesn ’ t and what impact does that have on you working capital ?
• Do you need to find funding to buy new equipment if critical equipment is close to end of life , are you coming up to a tight period where the timing of cash in and cash out means you can ’ t pay salaries or suppliers within the required timeframe ?
In relation to financial resilience , this is the area of your business you should look at first . Make sure you have a cashflow up and running , you are monitoring it closely and you are realistic in your assumptions . Ensure that you are factoring in inflationary increases to your costs based on current forecasts .
It ’ s easier and often cheaper to secure finance when you aren ’ t at a critical point or your business is in distress . Even if you see a need for it in six months ’ time , secure it now .
Having the resilience in your working capital to tolerate unexpected delays in orders , late payments and price increases is key , as is ensuring that you have access to the cash or finance to repair a critical piece of equipment .
RESILIENCE IS THE ABILITY TO IDEALLY AVOID ISSUES AND CRISIS AND BEING ABLE TO MITIGATE THE IMPACT OF THEM IF THEY DO OCCUR .
NICKI CLARK OBE , CHIEF EXECUTIVE OF UMI
Intelligent SME . tech