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Take a business healthcheck

By Paul Stuart, Business Link adviser

The recession has made many people in the cleaning and hygienebindustry step back, take stock, examine process and finances, and find better ways to operate. Adverse conditions have sharpened the desire to survive and succeed. Also the current climate has provided an impetus to diversify and grow.

Many businesses are re-evaluating key aspects of their operations, including cost base, suppliers, profit margins and markets. Businesses are reducing costs and renegotiating existing contracts, but there is also a focus on finding new sources of income by researching and targeting different markets, diversifying, and using e-commerce.

It is tempting for many to feel isolated if their business isn't doing as well as previous years. However, they are not alone.   Business Link, the government backed information and advice service is on hand to help. Business owners can attend workshops, arrange meetings with their local Business Link advisers or visit the Business Link website which is home to a wealth of information from raising finance, to employing people and improving your sales and marketing.

As a Business Link adviser, it is always good to hear about the progression of companies. Today, more than ever, it's essential that businesses are aware that they are not alone. Businesses should be urged to:

* Carry out a Business Link Health Check to review their current activities.   Sometimes an outside perspective can help business owners to ask the right questions and plan a new way forward. Since October 2008, thousands of businesses have benefited from a Business Link Health Check, where they are helped to carry out a comprehensive diagnostic, either online (www.businesslink.gov.uk/healthcheck), over the phone or face-to-face. This should consider things such as customer satisfaction levels, suppliers and their performance, products and services in comparison to other offerings, people and skills base and processes, procedures and equipment.  

* Look after their cash. Make sure that they are all paid on time, and pay their suppliers and staff on time. Businesses reduce their own risks by paying suppliers on time as it helps ensure the whole supply chain stays in the black.

* Understand their finances. What's their break-even point (profit margins)? How much of a cushion do they have? If sales/contracts don't make much profit, even a small increase in costs or a tiny drop in turnover could push the business into the red.

* Monitor the cash flow of the business on a daily or weekly basis - they shouldn't delay until the VAT Returns and annual accounts. Make good use of bookkeeping or accounting software to generate reports that tell the business how they are performing now. Or they can start their own spreadsheet, using a pen and paper if that suits them best.

* Know their gross margins. Avoid chasing sales with a low profit margin, if the same effort will secure sales with higher profits.  

* Be realistic about what they can and can't change. Prepare an honest forecast of sales, profit and cash flow, and be brutal about what needs to change.

For further information and advice on coping with the recession why not get in touch with your local Business Link adviser on 0845 600 9 006 or visit the website, www.businesslink.gov.uk