Lots of manufacturers came to us in 2001-2004 and most of our work seemed to be in that sector. Recent times have seen far fewer manufacturers in trouble but it looks like another difficult period ahead for the sector.
These days manufacturers are lean, mean and careful with costs, there is generally no more fat to trim so what tools are available to survive this downturn? Here are a few ideas.
- Work with the banks early if problems are looming. I think the business banking sector has support teams that are much better structured than even 2004. If covenants could be breached in the next 12 months get talking to your bank now.
- Consider insuring your debtor book. Yes this puts costs up but could save you a big bad debt in the next 12 months and therefore save you from insolvency. If you factor or invoice discount ask your lender about their products.
- Invest in a good credit checking tool. Check out people you are dealing with!
- Consider short time and lay offs. Better to do this than redundancies if possible. If not possible then start consulting about redundancies sooner not later.
- Refinance equipment to generate cash and or seek a capital repayment holiday with current asset based lenders (ABL), no one wants to lose your business and a 6 month holiday now could be the fillip your cashflow needs.
- Get your business plan out, dust it off and compare where you planned to be to today's reality. Set out strategies for sales, costs and marketing.Not got a business plan? Well time now to set one out!
- A oft repeated but good KSA tip, control your cashflow daily!
- Got good financial information? Great your are well set to react to difficult times. Not got a monthly profit and loss, cashflow forecast and meaningful balance sheet at the touch of a mouse? Get proper accounting support FAST. One of the most common things I see is poor accounting data. How can you run a business without it?
- DON'T STOP MARKETING!
- Get advice and or take counsel from mentors, colleagues, friends. "A problem shared"... as they say.