What to consider for the upturn
A balanced approach
Growth must go hand-in-hand with balance, otherwise your business could be destabilised as the recovery takes off. It’s worth keeping in mind that twice as many companies fail coming out of a downturn than going in – often as a result of expanding too quickly. A company that knows its market inside out while keeping a tight rein on financial controls will create this balance – and with it, sustainable growth.
Entrepreneurs sometimes concentrate on product development at the expense of strategic direction, which is equally vital as a business grows. A cohesive business plan can mean the difference between success and failure, so getting it right is well worth the cost of consulting a business advisor.
Keeping funding options open
The credit shortage taught some valuable lessons, especially the value of strong relationships with banks. Keeping your funding choices open is also recommended. Invoice finance, for example, is secured on your debtor book, which means the borrowing facility grows in ratio with your sales. This type of finance sits alongside a traditional overdraft or loan and is available from banks and specialist lenders.
Cash is still king
Cashflow is crucial to any business and a rolling 13-week cashflow forecast should be updated religiously. The alternative is to risk overtrading – increasing your costs in expectation of sales growth, without sufficient cash reserves to fund the gap between delivering your product and being paid.