Tenon warns entrepreneurs to prepare for stormy weather

North West entrepreneurs are concerned for the future of their businesses but few have plans in place to deal with potential risks as 2008 begins, the findings of the latest Tenon Forum report has revealed.

As the credit crunch takes further hold, and the Prime Minister issuing a bleak warning during the New Year message, new research from entrepreneur think tank, the Tenon Forum, reveals that four in ten (38 per cent) SMEs do not have any plans in place to address business risks.

Entrepreneurs believe the biggest threats to SME business in the next two years will be competition (24 per cent), the availability of time and money necessary to deal with red tape  (20 per cent) and a growing inability to hire the right people in the North West (13 per cent).

Difficulties generating new business and potential problems with securing finance are also likely to keep entrepreneurs awake at night, with 10 per cent citing these as the biggest risk for their business in 2008.

Martin Kirby, Managing Director of Tenon in the North West commented: “Despite recent interest rate movements, talk of recession is still prevalent so it’s understandable that entrepreneurs at the helm of SMEs in the North West are nervous about what 2008 will bring. Many of today’s owner-managers will not have experienced such a pronounced economic downturn before so it’s extremely important that they put robust plans in place now to face challenging times ahead. By taking some basic steps, entrepreneurs can help their business weather the storm.”

Tenon’s Top 10 Tips on how to ‘batten down the hatches’ and prepare a business for recession are:

• However positive things are, have a “Plan B” – incase the business is hit by something unexpected.
• Act: don’t wait for situations to get out of control before putting plans in place.
• Cash is king: have the best cash management approach - it’s simple and is the most important part of the business.
• Know where things are: make sure financial records are robust and up to date.
• Have the best possible relationship with the bank – it’s essential they are fully aware of the business’ financial situation.
• Take a new approach to tax – question what can be done to improve tax cash flow and ease payments. Consulting an adviser is an effective way to go about this.
• Even if demand is slow, always be in control of costs: know which are variable, what can be acted on and how the action will be achieved.
• Rehearse the most difficult conversations that may need to be had with suppliers, clients, customers, employees and financiers should the worst happen.
• Check employment terms and recognise who are the essential members of the team.
• Price properly - don’t over-react to market conditions, understand whether demand is price-sensitive and don’t give profits away.