Small business urged to plan now for economic transition

While the country braces itself for the impending economic transition, Australian operated, US Snap-on Tools , are advising its group and other Australian small businesses to prepare for the transition now. This will help them to effectively weather the full impact of economic changes over the coming months.

“Our experience in the US shows that small businesses need to ensure a plan is in place to secure smooth economic sailing during an economic period like the one we are currently entering. This can be achieved by taking the time to step outside of the day to day running of your business and look at the fundamentals of your business" said Nicholas Hudson, National Franchise Manager.

Some key areas that Snap-on are recommending their franchise network of business’ to prepare for include:

1. Checking business loans

You may be like many other business owners and have a loan that is secured on the family home. Now is the time to decide whether a review is needed to take into consideration its current leverage and the implications of cash flow for the business - consult a finance professional for advice.

2. Tax payments

Ensure that all your payments to the ATO are up to date.

3. Receivables

A sale does not count for much if it is not paid for in a timely manner. Ask yourself:

• Are my receivables under control?
• Could I suffer from a bad debt in the near future? Would this have the potential to make my business financially unstable?

4. Stock

It is unwise to tie large amounts of cash in slow moving inventory in the hope that it will one day be sold. Ask yourself:

• Have I rotated and updated my stock?
• Remember: It is easier to turn cash into assets than assets back into cash.
• Think about quitting old and slow moving stock with a “sale”.

“Rising interest rates and petrol prices are dominating the average Australian’s spending habits. Customers are watching their spending and this is being felt by retailers in general. This can create additional pressure for small business owners who have a lot at stake in running their business,” said Mr Hudson.

Snap-on home based business recommends that small business should focus on building customer relationships during this uncertain economic period. Good service will become more valuable to the customers and will be a major consideration when a future purchases decision.

“Snap-on, having survived the Great Depression in the 1930’s and all the ups and downs since then, understands the pressures the business cycle places on small businesses. Being part of a franchise network provides an extra support foundation when weathering these economic storms. Not only can the franchisee lean on the valuable knowledge of the franchisor, they can share their experiences and learn from others when dealing with peaks and troughs in any business,” said Mr Hudson.