Why is this?

1. The main reason is that, as businesses shrink during the recession, so do their working capital (cash) needs. When trade picks up, so do costs and payments, but the businesses do not have the cash to pay for them yet, because of the delay getting the cash in from their customers. This is despite the fact that, on paper, the business is profitable. This is known as ‘overtrading’.

2. Businesses stop investing during recessions. As they emerge, they need to catch up with technical innovations (new IT, marketing campaigns) to be competitive. This creates another cash drain.

3. There may well be more competition, e.g. from people made redundant who set up in competition and from other countries that had less of a downturn and where labour costs are lower.

4. The tax burden (often one of the biggest costs in a business) is even greater after a recession, as the government looks to repay its (i.e. our) debts.

5. The availability of funding from banks etc. to cover the cash shortfalls is very limited, and many of us have less equity in our houses to dip into.

How can you avoid failing into these traps?

a. Planning and forecasting are crucial. Think about the cash implications of every deal that you do. If you buy in stock or services, when will you get the (cash) return on that investment?

b. If you are likely to need funding to exploit great opportunities, ask for it now while you are in a relative position of strength rather than when you are desperate. Remember, the banks would rather lend to someone who doesn’t need the money now!

c. Make sure you agree terms with customers. If necessary, demand payment up front or use direct debits to take control of the payment process.

d. Keep even tighter reins on costs than you have during the recession.

e. Keep an eye on the economic trends, i.e. what ’shape’ will the recession be? (See Pauline Williamson’s recent article on this.)

Do you have any other suggestions?

If you need help, e.g. planning and forecasting or reducing tax costs, let me know.

Andrew Gray
Chairman & Business Development Director

I don’t usually do book reviews in the conventional sense. I prefer to take the ideas from my recent learning and experiences and weave them into my own thoughts and blog postings. (Is that what some people call plagiarism?)

I am making an exception for this book because we are offering a limited number of free copies to readers of this page (see the end of this posting to see how), and I would not expect anyone to waste their valuable time on a book (free or not) without knowing a bit about it.

What’s in it?
The book contains 176 key messages, with empty boxed-off spaces in the body of the text for the reader to write in their actions. These messages are in categories such as:

• Tough decisions
• Get selling
• Back to basics
• Opportunities
• Invest

I think that the main value of the book is in the last two of these sections. There really are enormous opportunities for anyone prepared to take their blinkers off and take advantage of, for example, the much lower barriers to entry in existing markets that exist in recessionary times.

It was first written in 2008 and then revised and reprinted (twice) in 2009, so its topical credentials are good.

The bits I liked
Whenever I read books I highlight the ‘good bits’.  Here are the things that I highlighted:

1. Recession exposes poor working practices
2. Now more than ever, we need to be brilliant at the basics
3. The way out of recession is innovation
4. Get out of the spiral of price cutting now
5. Use students to get work done cheaply and well
6. Know the facts - measure and manage all the KPIs (Key Performance Indicators)
7. Use adversity to get your team to act like a team
8. Recruit for attitude now more than ever
9. Only sell to FANs (those with Funds, Authority and a Need)
10. Do ‘real marketing’ – targeting, segmenting, adding value at minimal cost etc
11. Communicate simply and effectively. The phone is better and quicker than writing, even if you have to leave a voicemail.

Conclusion
The book is subtitled ‘A blueprint for business survival’. Personally, I would have chosen something a bit more direct,  e.g.  ’Everything you should have been doing in your business anyway, and which the downturn will not force you to do’.

I think that if you are just setting out on your business development journey, or if you are already on the way but risk being blown off course by all the negativity around at present, this book is a great way to (re)focus on the right path.

Get a free copy
If you are a client of Kirkpatrick & Hopes and you would like a free copy, please contact Bernadette Brownlie or any of your contacts at the office.

We also have 10 copies that we are offering free of charge to non-clients on a first come, first served basis.  Please email mail@kandh.co.uk asap if you’d like one.

Once you have read it, please post a comment here to tell us your views.

In the last few weeks nearly every client I have spoken to has said that things are picking up for them, including the estate agents I saw today – they have had record weeks for potential buyers signing up and for lettings income!

My hope is that the media run out of bad news headlines and start reporting the more positive stuff that is actually happening in the real world.

I wish there were more of a commercial incentive for someone to shift mindsets of all of us. A few of the books I have read recently have definitely helped do this for me:

• Your Money or Your Life
• Affluenza

And to a lesser extent:

• Rich Dad Poor Day
• Go Giver

Have you read any of these? Would you like to discuss further?