Prime Blog

December 2011

Plan To Be Positive And Let the Doom & Gloom Merchants Fail

I have been talking to lots of clients this week who operate in various different industries and it is so obvious which ones will have a great 2012 and which ones will struggle. So, which ones will succeed? Simple; the ones who want to make it happen; sounds a little clichéd I know but the ones who look to develop their business, find new markets, improve their current operations and efficiencies will be the ones that do well.

These companies are from many different industry sectors, from manufacturing, construction and services industries. Each sector has been hit at different times and at different levels during the recession and are recovering at different paces also.

Here are a couple of stories of the successful ones:-

A manufacturing company who suffered a 35% drop in turnover when the automotive and power generation sectors were hit by the recession, took all the appropriate and hard steps to cut costs and protect cash flow very early, as they had the right level of management financial reporting and forecasting, a good example in itself.

However at this point instead of sitting back and battening down the hatches, they engaged proactively with their customers and looked to the future to see how they could work together more efficiently and on new products. They acquired new plant, at the best time to buy! Using this new plant now the market is recovering, they are more profitable, and have increased their capacity due to the investment which means they can sell more. The closer ties with their customers, and trying to support them at the difficult times, has strengthened their relationship and they have more impressive investment plans and developments going forward.

The construction industry has been probably the hardest hit of all the sectors during the recession, and is not currently recovering in theUK. Therefore our client who is a professional firm of surveyors and arbitrators were finding it difficult to secure new work as most construction projects were shelved. Instead of scratching round cutting margins and chasing after low level work every one of their competitors were chasing, they took a different approach. They recruited other professionals with different skill sectors and created partnerships to diversify the work that they could do, this meant that the overheads could be shared across new revenue streams and transferable skill sets of expensive employees could be shifted to the new income streams enabling the company to better manage peaks and troughs in the work loads.

Not only this but they also looked to foreign expanding markets in particular in renewable energy as this is an area where they could compete and gain better margins than work within the UK.

Plan to succeed, don’t just react!

These companies are great examples as they were up to the minute in their understanding of how their companies were performing and how they were going to be affected by the downturn. They then looked up and around their market place to formulate a clear plan and strategy to return to the turnover and profit levels they expected.

You may ask how did they make these investments when profits and cash flow were down, and banks aren’t lending money? The owners of the companies did not strip out all of the profits, they took a forward thinking approach and re-invested some profits back into developing the business, this gave the banks good comfort that the owners were committed to the future of the business also and did not want the banks to take all the risk. As already mentioned they both had great financial information, either provided by internal qualified accountants, or using Prime’s Business Services offerings for management accounts and forecasts, this combined with a clear direction and plan gives the bank comfort and the ability to make a lending decision.

Be better than your competitors

The point of these stories is that 2012 can be great, average or poor, it really is up to you. To make it great you need to have a clear plan and strategy, up to date financial information, the ability and desire to make it happen and the support from employees, customers and professional advisers. You do not need to re-invent the wheel or enter completely different markets; you just need to be better than your competitors and you will succeed! This is possible - you just have to make it happen and not just sit back and wait to see what turns up in 2012!

If you want to talk to a business adviser about your plan, strategy and financial support please contact us.

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