Spread your risk

A lot of smaller businesses rely on just one or two customers and one or two products and services. In an economic downturn all it takes is for one customer to move to a cheaper supplier or even go under and the business is no longer viable.

Who earns you the most profits?

Identify your most profitable customers – then seek to bring in new customers with a similar profile.

Watch your back

While trying to pull in new customers do not neglect those vital 20% who earn you the most profits. It costs four or five times as much to get a new customer as it does to keep an existing one.

Spread your risk

Expanding your prospects One way to attract a wider customer base is to make the most of the internet.

What to watch out for

• If you are expanding into new markets or need new equipment to remain competitive, avoid using cashflow to finance this – you may need this cash to keep you afloat. Use alternatives such as asset finance.

• Avoid taking on more than you can handle. This is known as overtrading – an imbalance between the work you take on and your capacity to do that work. Once again you can run out of cash to finance these new orders.


[Extract from Trading Through The Economic Downturn - published by NatWest - full Guide available by clicking here]

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