Cash is King
Whether we in Australia go into a technical recession or not is somewhat irrelevant. There is no doubt there has been a significant slowdown in our economy. This is likely to continue for some time into 2009. So what does this mean to business. There is a couple of important consequences however here I will only cover one. ( will expand on the other consequence in a future blog post).
Cash is king.
A business must pay particular attention to cashflow when the economy turns. There will be greater pressure from clients who delay their payment a little more than normal. Also creditors may be on the back of small / medium business to ensure that they collect their money earlier than usual.
So this is a time for business to review there credit terms, look at their systems to ensure prompt collection of debtors and review any options with respect to creditors. It is critical to understand in detail the working capital requirements of the business and be measuring this regularly. Working capital shortage can cruel a profitable business.
What is your working capital cycle? How long does it take from the moment work is in the door, stock on the floor until you have the cash from your clients? Are there any ways to reduce this timeframe?
Remember – measure what matters – cash is king.
Giving Customers what they want
Last week we went along with 50,000 other Brisbane people to Andre Rieu’s concerts. His business is amazing. He has had phenomal CD & DVD sales worldwide with light classical music. This is a genre of music that usually has limited appeal but Andre has transformed this by putting fun into it. He is a great musican but also a great entertainer and businessman. He has the complete package. He took an existing product being classical music and transformed it and marketed it in a fresh manner. So in the middle of Suncorp Stadium we had a castle with an ice rink. The castle was an incredible example of attention to detail. The show was an exceptional example of interacting with your customer base and giving them what they want. Now importantly remember the tickets cost in excess of $200 per person and the place was full and all we are hearing is recessions or business failures. Andre’s business was not an overnight success. He had to work at it. But he gave the customers what they wanted. And they gave him the worldwide success.
Give your customers what they want? Ask what they want and then give them a great experience.
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