Identifying your financial risks
Knowing the financial risks in your business is the number one key to surviving in a recession. When you know the risks, you can take action to reduce them. Get in touch to run your numbers through our new value tool and discover your potential risks.
In tough economic times, defining your financial risks is a superpower.
Knowing the financial risks in your business is the number one key to surviving in a recession. When you know the risks, you can take action to reduce them. After all, if you keep doing what you’ve always done, you won’t keep getting what you’ve always got - you’ll get less.
Everyone is feeling the pinch. Businesses are hit with a double whammy. Being faced with inflation and increases in operating costs, as well as the tightening of consumer belts. While these are out of your control, you can take steps to control the impact this has on your business.
Understanding key financial drivers
It’s obvious that a drop in sales reduces your profit and cash flow, but do you know how much impact it will have? Even if your sales stay the same, what will happen to your profit and cash flow as expenses increase?
One reason sales can drop is due to the loss of regular customers.
Take this case study of John's Business:
- His sales are £625,000 and he expects the customer retention rate to drop from 75% to 65%
- That alone would reduce his cash by £22,275 and
- Reduce his profit by £27,500.
- This does not take into account the impact of increasing costs of running the business.
Do you know how small changes will impact your finances?
You may be shocked at the impact even a slight drop in sales and a rise in expenses can have on profit and cash. You are an expert in doing what your business does, but you need to keep an eye on your key financial drivers.
Not understanding and monitoring the key numbers could see your business losing money.
How might your business be affected?
We have a special value calculator to show you the impact of the key changes you can expect in a recession. This may be things like a drop in sales, an increase in expenses, or a reduction in cash flow. We will help you identify the areas where you can make small changes to improve your results and protect your cash flow and profit.
If you are worried about the financial risks in your business, you can start by building awareness of the problem.
Book your FREE Unlock the Cash Strategy Session to get your workings and start working on a plan.
