Common business challenges solved (Part one)

Every business owner needs advice at some stage as they will inevitably hit roadblocks or the unexpected that will throw all their plans out the window. *ahem* COVID-19!  
 
The Recovery Advice for Business scheme offers small businesses impacted by the coronavirus pandemic access to free advice from experts to help them recalibrate and relaunch. We asked some of the advisers taking part in the programme to share tips on how to overcome some common business challenges.  
 
Whether you're struggling with cashflow, managing a remote team or dealing with other issues, we've pulled together the best business tips so you have a shortcut if you ever find yourself in one of these situations.  
 
The first six small business tips are below. We'll share six more next week:

1. Managing cashflow and debt

2. Getting paid on time

3. Handling unpaid tax liabilities

4. Negotiating terms and conditions

5. Planning for the unexpected

6. Building foundations for success

If you need a sounding board, you can book a free one-hour call with the advisers featured below as well as lots more experts. Existing Enterprise Nation members can find an adviser here. If you're not yet a member, sign up for free here.

1. Managing cashflow and debt

The biggest challenge most businesses face at the moment, according to Alan Davidson, director at Pentins Business Advisers, is cashflow. Cash is the lifeblood of any business and without it, your business could go bust within in a matter of days.

Alan recommends five tips on managing cashflow:

• Firstly, you need to have an understanding of the importance of cash flow because without fully realising this, you will just keep putting off fixing it.

• Understand the difference between profits and cash. Just because you made X amount of profit, does not necessarily mean that is available cash for you to play around with.

• Identify the causes of poor cash flow, so that you can then start working towards making some changes to free up cash in your business.

• Learn how to manage and control incoming and outgoing cash, before you start thinking about getting new customers or increasing prices.

• Prepare 90-day and yearly cash flow forecasts, to get a clear picture of your cash flow and your overall business health, make informed financial decisions with confidence and have an idea of the future profitability of your business.

Speak to Alan about managing cash flow

2. Requesting payments for invoices

Paul Savage, principal consultant at AIMS Accountants for Business, also shared his advice on cashflow. Paul sees many business owners struggle with limited cash but they have significant amounts outstanding in sales that have been "given away". A sale is only complete when the money comes in the bank. 
 
To get paid, Paul recommends: 
 
"It sounds too simple but don't be afraid to ask! I have worked in senior positions in companies where we had to manage our cash flow extremely carefully and the first filter when deciding who gets paid was always 'have they asked for the cash yet?' If they hadn't asked they didn't get on the list to get paid.  
  
Talk to the customer about payment - they will be expecting it - and make sure that you have regular conversations with the customer to discuss progress so that nothing will stop that cash coming in.  
  
Also ensure that you make it easy for the customer to pay e.g. have you put your bank details on your invoice so that they can pay electronically? Could you collect payment by direct debit?"

Ask Paul for advice on payments.

3. Handling HMRC and unpaid tax liabilities

Sometimes, small business owners will not acknowledge if they are facing difficulty making necessary tax payments on time.  This may become more widespread over the coming months with income tax and VAT deferrals falling due in Spring 2021.    
 
According to Marcus Worthington, partner at Thompson Jenner LLP, HM Revenue & Customs (HMRC) wrongly interpret a difficulty paying as a refusal to pay, and their attitude reflects this. HMRC can and will chase the unpaid debt aggressively which can cause significant stress to taxpayers at an already challenging time. Failure to pay on time can often lead to penalties accruing into the thousands of pounds.  
  
To get on top of unpaid tax, Marcus recommends:

"Dialogue with HMRC is critical and will reduce the stress of being chased for an ever increasing tax liability.  Reaching a Time-to-Pay arrangement with HMRC is done on an individual basis to suit the circumstances of the taxpayer.   
 
In acknowledging the difficulty and discussing this with HMRC before the payment deadline, a taxpayer can ensure that penalties are not charged and will see that HMRC's attitude will soften to support the taxpayer to pay was is owed in a way that is sustainable."

Get tax and VAT advice from Marcus.

4. Negotiating fair terms and conditions

Michelle Small, managing director of Docea Contract Review Services, sees many small businesses forced into signing their client's terms and conditions in order to supply. These terms are geared to protect the customer, not the supplier, therefore can leave businesses liable for claims.

Before you sign a contract, Michelle recommends: 
 
"Each set of T&Cs is different, so there is no hard and fast rule. The best advice I can give is always read the terms - if you don't understand them then ask someone who does - and if you don't agree to the points in the contract, discuss it with your client.  
  
I find a lot of businesses are intimidated by the sheer size of some companies, and therefore don't even ask questions. Sometimes clauses aren't relevant to either what the small business is supplying, or plain just don't make sense - yet somehow there is an obligation to sign the contract for fear of not getting any work. 
  
In business, sometimes people forget that they are ultimately dealing with people, not a faceless corporation - so there is always room for negotiation."

Get contractual advice from Michelle.

5. Planning for the unexpected

Simon Grant a business strategist at Business Doctors, works with business owners to develop goals to grow. The common thread he sees across challenges such as sales, profitability, cash flow, staff, and competition is lack of planning.  
 
Simon says: "It is like driving a bus without a destination and no Satnav to show where you are going. Any obstacle will likely have a major impact on your journey, and decisions will be made without a goal in mind. You will ultimately run out of fuel."  
 
Business owners need to stand back and take stock. Simon recommends:

"Business owners are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. To give your business some focus for growth, a business review and preparation of a strategic plan is an absolute necessity.  
 
Creating a strategy for growth helps you re-focus your business on delivering the outcomes that YOU want and provides an effective framework for positive change. It also provides a plan to excite your employees and get them all pulling in the same direction."

Ask Simon for strategy advice.

6. Building foundations for growth

Stephen Grey, business coach and former senior executive, works with small businesses owners to lay the foundations essential for sustainable growth. As a new business grows it must think about improving operational efficiency and customer service impact.  
 
He says, "Entrepreneurs have courage, passion and skills but cannot cover all bases or necessarily justify the cost of specific functional experts. The decision to seek help in strengthening their team is a pivotal one, especially in the context of valuing their business culture and progress to date. Ultimately, they may view it as higher risk than starting up, but they have to weigh the cost of doing it against the cost of not doing it." 
 
For a growing business, Stephen recommends:

• This may be a good time to reassess your strategy and business plan to ensure that they are still fit for purpose. Be prepared to reset your priorities and decide what you can compromise and what you cannot. Don't be too proud to change something you previously held dear.

• Decide what your business should look like to be future proof, for example: skills, capacity, team development, Sales/Customer channels, strategic partnerships, technology, compliance, and culture.

• Functional and channel alignment are critical to success. Customers judge you against their worst experience of your goods or services; a great "in person" experience will be undermined by a poor online interaction. Customer satisfaction must be judged against customer effort.

• Process and policy issues are often based in simple problems. Ensure that job descriptions describe what the role really does. Ensure that performance and  quality targets are clear. Ensure that accountability for results is matched by delegated authority to act, with a clear escalation path. Process and policy provide a mechanism for controlling activity and outcomes. They are enablers, not the reason the business exists.

• Report based on impact on customers, employees, cost of operation, compliance and risk.

• Don't be distracted by cultural trends. Diversity and inclusion are important. Honesty, fairness and consistency in management and communication are critical. Table football and puppy dogs are not.

• Whatever your approach to flexible working and benefits, it will be essential to find a way to monitor activity, performance, and outcomes, not least to ensure that costs are controlled. Don't let the tail wag the dog.

• Financial control and compliance are not negotiable, but they should not be a barrier to progress.

Ask Stephen for advice on business growth.

Do you have a business challenge and need advice?

• Enterprise Nation members can find an expert who can act as a sounding board. Advisers who mention 'Recovery Advice for Business' in their profile are offering up to one hour of free advice. If you're not yet an Enterprise Nation member, sign up for free here.

• Attend a 30-minute Lunch and Learn webinar. Over 5,000 small businesses have joined these sessions for daily doses of business tips.

• Access Amazon Small Business Accelerator e-learning, a free online educational programmed designed for anyone looking to start or grow a business.