Saturday, 16 December 2017

Information and commentary for the small business banking industry

Helping small businesses survive the tough times

Surviving difficult times

At some point, most small businesses will experience financial difficulty. One of the first places they’re likely to turn to for help is their bank. Helping your customers understand the challenges they’re facing and supporting them as they meet those difficulties is key for any banking relationship.

What you’re looking to do is help your customers avoid some common mistakes – such as assuming things will always stay the same, or counting on their business to adapt to changing times – so that they can not only stay afloat, but can use the experience to take advantage of opportunities. It’s the old saying – every cloud has a silver lining.

Help with reducing vulnerability

In most cases, business owners will have a pretty good idea of their weak points, but if they seem to be turning a blind eye, sit down with them and help them pinpoint vulnerable areas.

A good way to do this is sit down with them and assist them with performing a SWOT analysis.

Once you know where the problems are, you can help them to:

  • Fix what needs fixing – if they’ve been avoiding hard decisions, now’s the time to toughen up and make them. Whether it’s reducing spending or putting more effort into sales, addressing weak points is essential.
  • Set targets – help them to select some KPIs that need monitoring. If you’ve got some key industry figures on hand, use them to help measure the business’s performance against the standard.
  • Preserve cash – get them to take a long hard look at their spending and costs. See if they can free up any cash through selling assets or having a sale.
  • Manage cash flow – put them through a cash-flow forecasting workshop, and provide them with essential tips for managing their cash flow.
  • Avoid mistakes – move them away from errors such as desperate discounting, continuing to sell in a way that’s clearly not working, or missing out on opportunities to innovate.

Get them motivated

In tough times, the biggest dangers are panic and inertia. In other words, they can’t afford to sit there doing nothing, nor can they flail about doing just anything. Help them to see that becoming depressed by the difficulties they’re facing isn’t helpful. That’s a good way to fall into narrow thinking, hence missing out on fresh ideas.

So, as part of their team of advisors, help them to remain positive by assisting with putting a proper plan into place, so that they can look past the difficult times to the opportunities that will inevitably follow.

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