Money

Tips to boost business confidence

Mike Hogarth
Mike Hogarth Brett Wortman

A NAB quarterly business survey has revealed that business confidence deteriorated across all industries in the September quarter.

The largest deterioration was said to be in finance, business and property, with particularly weak confidence recorded in manufacturing. Business confidence was strongest in mining, followed by construction, where it was neither expanding nor contracting.

A Sunshine Coast franchisee of CAD Partners, Mike Hogarth has encouraged businesses to follow a business model to boost confidence locally.

CAD Partners head Sue Hurst released five simple tips to follow that could add value to businesses and iron-out management and financial issues.

"It is about making sure business are on top of finances and are able to plan for the future," Mr Hogarth said.

"Businesses also need to start talking positive and it would make a big difference to their success."

CAD Partner's tips for thriving in 2012:

Business model improvement

This is about how well a business operated, how a business delivered their product or service and how the business was funded.

A business model can be a "fluid phenomenon", a model which is being constantly tweaked to achieve maximum efficiency and performance. Having the right model can make business life smooth whereas the wrong model can result in constant struggle.

SWOT analysis

Have a look at the business strengths and how they help the business compete in the marketplace.

Look at the business's weaknesses and consider what they're costing and how you can improve them.

Opportunities can be found in places you may not think of. Threats can be environmental and beyond your control, however, if you consider them and put in place appropriate risk management, you may be ahead of the competition when the proverbial hits the fan.

Constant improvement

The key to constant improvement is listening to staff, customers, suppliers, shareholders and advisors.

The best way to capitalise on constant improvements is to have good systems in place that enable absorption of improvements.

That way when you come to sell your business you've built a solid asset that can be handed over to a buyer and odds are you'll get a premium price. A systemised business is easier to sell to a new owner.

Cost management

Direct costs are those that are absolutely necessary to deliver a product or service, such as service labour or purchase of product, and are the biggest target for improvement.

Research your industry and technology to find better ways of operating.

A small improvement in direct costs can have a huge impact on your bottom line. Don't cut "muscle" in business such as effective marketing or good staff, but look for "fat" or resources that aren't delivering value.

Cash flow management

By 2012, some businesses have had a rough couple of years and getting to the end of their resources. They may have had to use cash reserves, borrow or reduce overheads. A good indicator of cash flow is calculating liquidity. A good measure of liquidity is "current ratio". This is the result of dividing current assets by current liabilities. It shows the number of times current liabilities are covered by current assets. Banks look closely at this ratio when lending, as they want confidence about loan repayments. Business owners need to know this for their own peace of mind.

Topics:  finance management small business tips



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