Practical financial management.

Connie Bruwer from PC Bruwer and Partners gives advice on this important topic.

Question:  In today’s troublesome economic times, the proverbial hill against which the business carriage has to be dragged up, is quite steep. This is due to soaring prices and interest rates that puts a huge demand on your cash drawer. The question is what can you do to get your business up the hill?

Connie:  Practical financial management is of course necessary, but what goes on in one’s head is just as important as doing the financial calculations.

Financial calculations alone can make you feel negative, so it’s important to get your head clean first. My first piece of advice is not to give up. If you just sit and do nothing, no company will survive. The same goes for a negative attitude.

Question:  What is the first important thing to do?

Connie:  The first important thing is to accept the situation. There is nothing you or I can do about it. It will not help by complaining about it and it will also not help if you ignore the situation. Rather accept it.

If a blizzard hits me in the high mountains, I have to accept it and live with. Do what you have to do to survive and wait for the good weather.

Your company must also survive, in a different context, but basically the same rule applies.

We do not know how long the storm will last, that is why it is now the time to tighten the belt and make do with what you have. One can adapt, you can survive and you can still achieve your business goals by simply not allowing things beyond your control to get you down. Focus on your goals and you will get over the problem.

Question:  What about customers?

Connie:  Look after your customers. Make more effort than ever before. Try to rather absorb some of the costs yourself, rather than to give it through to your customers immediately.

A family member of mine deliberately cut his profit margins in such a way that he can more or less just survive. Now he retained all his customers, and he let his customer base grow almost daily.

Question:  What is the result?

Connie:  The result? Although his profit margins are lower, his turnover is higher, unlike most other businesses today. When things start getting better, he is also in a better position in comparison with his competitors. And as long as his product is good, his clients will stay with him. Do not underestimate the loyalty of customers. It is now time to return to your core business. In the good times we all are accustomed to spread our wings and to reap a little fat in places where we only have a collateral interest. In difficult times, rather leave the fat, and focus on your core business. Also see where you can cut down on overhead costs.

Question:  What is the best way to get an honest answer here?

Connie:  The best way to get honest answers here, is list your expenses, just as you would do when you draw up a budget, but with the difference that you will see where you can collect and where you cannot spend. Work in the negative, subtracting, and remove unneccary expenses. Make your business as slim as you can.

Don’t forget your employees. I cannot bring myself to recommend that you retrench workers. This is because those people are the wheels who provide your business success. Share your problems and plans with them.