This time last year, you might have been pondering Christmas bonuses or booking your summer holiday, but with a completely different business landscape in front of us, your head is no doubt filled with different questions. Here we explore four common topics keeping Kiwi business owners up at night.
“How can I put my prices up without losing customers?”
If you need to change your pricing to make ends meet, be honest and up-front with your customers at all communication points.
Make it clear on your website and social media that prices have changed and why.
Contact your most valuable customers and suppliers to let them know about the changes.
Meeting people face-to-face? Make sure they’re aware of the price hikes before they’re invoiced – otherwise, you could be in breach of the Fair Trading Act.
Provide the best customer experience you can by updating staff on any changes and advising them on how to communicate them to customers.
Worried you’ll lose fans? Consider staggering price increases of individual products over time.
“I want to sell my business. How do I get it ready for sale?”
Selling your business involves a lot of homework. You need to get it looking as “shiny” as possible before getting it valued. Here are some tips:
Sell assets you’re not using, think twice about investing in long-term projects and sit down with us to put together a realistic financial forecast.
Talk to us about creating a strategic business plan.
Sort out any legal issues or staffing problems.
Get health and safety, internal systems and accounting software up to date. Talk to our Process Optimisation team about how we can streamline your business processes and systems.
How are your website and social media looking? Could a buyer hit the ground running with them? Talk to our Digital Transformation team about how we can transform your online presence.
Our Business Advisory team can talk to you about ways to boost your sales revenue and pre-sale profit margin. Remember it’s often the last two or three years’ profit, and future maintainable profit, that determines the value.
“Am I eligible for more Government funding?”
Businesses who employ fewer than 50 staff could be eligible for loans of $10,000 plus $1,800 per full-time staff member, thanks to the Government’s Small Business Cash Flow Loan Scheme running until 31 December. To apply, there is a list of things you’ll need, including your NZBN and proof that due to COVID-19 your business suffered a 30% drop in actual or predicted revenue between January and June this year. Find out more here.
The Business Finance Guarantee Scheme is another option – it supports operating cash flow disrupted due to COVID-19. Participating banks can provide new loans, increased limits to existing loans, or a revolving credit facility to eligible businesses. The scheme supports banks to take on lending by the government taking on the default risk of up to 80% of the loan. Find out more at www.business.govt.nz
Are you doing business outside of Auckland, Wellington and Christchurch? You could get a piece of a $3 billion pie, as part of the Provincial Growth Fund which aims to help grow economic development in the regions over the next three years. Click here to find out if you’re eligible.
How can I improve the cash flow in my business?
If you are taking on new jobs or projects with clients you haven’t done business with before it is a good idea to ask for references or to get some payment before starting work to reduce the risk to your business. Remember a sale is not actually a sale until the customer has paid.
Invoice clients regularly. Invoicing could be done at the end of a job or you could consider progress invoicing so that you can see early if you’re not going to get paid, enabling you to put a stop to future work if necessary.
Investing time and effort into good debtor management practices can reap big rewards. Having your customers pay invoices on time, therefore improving your cash flow and increasing your bank balance can be just as positive for your business as increasing your prices. Be clear with customers at the beginning of a job about what the payment terms are, regularly review who owes you money and don’t be ashamed to follow up overdue payments from your customers. Sometimes segregating the responsibility for chasing up debtors from those who are performing the output generating activities can help to avoid creating awkward future business relationships.
Make use of the features in your accounting software – these systems have the ability to email monthly statements to your customers as a gentle reminder of what is due for payment, and many of them also have automatic invoice reminders that can be set to send reminders to your customers without you needing to action anything.
