5 ways to tackle economic uncertainty
Economic uncertainty is an ongoing worry for any business owner.
While you can manage your finances, the broader macro-economy is beyond your direct control. And in the first few years of the 2020s, there have certainly been plenty of tricky ups and downs for your business to navigate.
Current economic uncertainty stems from a number of factors, including:
- Fluctuating markets
- Geopolitical tensions
- Pandemic recovery
- The impact of climate change.
This unpredictability poses significant challenges for sustained growth and stability – but there are simple steps you can take to tackle these challenges.
Simple strategies for tackling the challenges of economic uncertainty
Good financial management is the key to tackling any period of economic uncertainty. When sales, revenues, supplier prices and operational costs are all highly dynamic, it’s good to know that your business has cash in the bank and a solid financial strategy to stick to.
But how do you get tighter control over your business finances? And what are the main areas to focus on, track and manage as a business owner or financial director (FD)?
Here are five ways to tackle economic uncertainty:
Manage your cashflow effectively
Cashflow management is the process of tracking your cash inflows and outflows, identifying potential problems and being proactive about taking action. It’s helped by running regular cashflow forecasts and sticking to budgets.
Cashflow forecasting applications, such as Futrli, seamlessly connect with your Xero accounts. They provide a detailed perspective on how your cash will flow in and out in the upcoming months. This crucial information empowers you to make well-informed decisions.
Carry out spend management
Spend management involves tracking your expenses and identifying areas where you can cut costs. You do this by switching to more cost effective suppliers, cutting back unnecessary expenses and having tighter approval processes. Talk to us about implementing expense management apps into your business.
Negotiate better terms and prices with suppliers
Negotiation can help you save money on your raw materials, labour and other important costs. You can also negotiate better payment and credit terms by building trusted relationships with your suppliers.
Embrace AI automation to cut costs
Artificial intelligence (AI) tools are a great way to automate tasks, such as customer service, billing and inventory management. This frees up time for strategic activities and saves you money on labour costs.
Diversify into new products or markets
Diversification helps you reduce your dependence on a single product or market, making your business more resilient to economic downturns. It’s important to choose products or markets that are complementary to your existing business, and that have good growth potential.
Talk to us about strengthening your financial management. We'll look after your books so you can look after your business.
With the world in such an unstable state, it’s always difficult to know exactly what lies around the corner for your business. But it’s safe to say that with a robust and agile financial strategy, you’re in a better position to flex your revenue streams and overcome any cashflow pitfalls.