The Week Ender: Credit Crunch – See It Coming?

Credit Crunch, the new scare word of our times. But what does it mean for your business? How can you minimise the effects of it on your business?

In the final analysis the effects are financial, your cash flow is going to stop you will run out of money – that is going to be the problem. So before you can decide what to do about it find out how it would affect your business. Planning your cash flow is the easiest way to see the effects of the credit crunch on your business. You need to ask yourself questions like:

  • Is my bank going to call in a loan/overdraft facility?
  • Is my turnover going to decrease?
  • Can I decrease my fixed costs in my business?

These and other more business specific questions will get you started. Using this information and inputting it into a simple cash-flow model will help you to predict what your businesses future looks like. In the coming years cash is everything, and I don’t mean cash as in ‘money coins and notes’, I mean cash in the liquidity sense of the work – your businesses ability to pay it’s bills and your wages. Nothing is more important than that.

Some people will tell you to get your accounts done and have a look at the numbers. Forget it, it’s all done and dusted – it’s the past. You need to look into the future and get ready for the lean times. Start planning for the above scenarios, but them into a cash-flow and you can see what your problem could be. Having this knowledge will empower you to plan your way out of it, before it is to late.

It is better to make some redundancies and cost cuts now, before the whole business runs out of money. –ST.

comments powered by Disqus
WinWeb Business Cloud - Creating Financially Sustainable Businesses