Through my private equity company, Ravensbourne, I help turn around the fortunes of struggling businesses.
I have first-hand experience of how a shortage of investment can cripple small or medium-sized firms.
But coming out of the downturn can be an equally financially risky time, so here my top tips on how to survive and prosper as the economic situation gradually improves.
Be prepared
While signs of a recession coming to an end are always welcome, there will be new challenges to overcome. Company finances can be put under enormous pressure during this time and it’s important your business is prepared.
Orders can go up, but often in lower quantities (for the same sale price) with shorter deadlines demanded. Business supply chains can empty out quickly, which leads to shortages.
Companies may also need to increase staff and other resources after having cut back during the downturn. All of these factors are likely to increase costs and negatively affect cash flow.
Borrow and use other people's money when possible, but do it wisely
Don’t ignore the situation
Compounding the problem is tighter credit from the banks and suppliers and a demand for quicker payments.
My advice is not to ignore the situation, and if necessary get external specialist advice. Consider all the options before committing more of your own cash or borrowings.
Borrow and use other people's money when possible, but do it wisely. Look inside your own business for resources.
Don’t be afraid to ask for help
Recognising the situation and planning your way through the economic recovery can be the difference between a business that makes it to a brighter future and one that doesn’t. Do ask for expert help, it will cost a little, but can make all the difference.
