Is the UK heading for a second wave and a double dip?

With the recent spike in Coronavirus cases across the UK, many of our customers will be asking, “are we heading for a second wave and what are the economic ramifications to their businesses if this happens?”

At 3D Group, we have been fortunate enough to avoid the worst of the economic and social ramifications, but with the increasing likelihood of a second national lockdown, we are hoping to help our customers prepare for the worst. Here are some tips on how you can minimise the risk to your automotive locksmith business during the second wave and potential depression.

Get your collections in order!

When approaching a recession, it’s good to have a set process in order to manage your debtors. During a recession, it’s easy to see your clients delaying payments to manage their own cash flow, but you mustn’t neglect your own, or you will end up in the same boat. This is the reason it’s essential to make sure you have set payment terms and a method of enforcing them. Best practice legal collections procedures are readily available on the internet, so there really is no good reason not to have them within your locksmith's business.

 

Here are a few quick best practices you can easily implement: 

• Offers 30- to 60-day payment terms only to good clients 

• Use a professionally written contract

• Implement a completed work form

• Sends invoices promptly

• Follow up with clients regularly

• Handle disputes calmly & professionally

Outline your payment terms clearly and thoughtfully.

In order to do business with larger clients these days, it’s unfortunate truth that you have to offer payment terms such as giving 30 days to 60 days for them to process a payment. This leaves you with the problem of assessing a client's creditworthiness. It is possible to assess the creditworthiness of the company on reputation alone. However, it is always more accurate to do company credit checks with services such as Experian.

Separate the wheat from the chaff.

All companies and businesses will inevitably end up having a few difficult clients. The worst cases are those that frequently make ungrounded complaints, pay late and withhold payments for unfounded reasons. These clients should be transitioned to pay-in-advance clients and if particularly troublesome, thanked for their business and let go, but be sure to make sure you fulfil all contractual obligations of your relationship before terminating them as the client will often get litigious.

Put aside money for a rainy day.

In order to make sure that your auto locksmith business can survive a rainy day, it is always wise to put aside a proportion of your daily profits into a savings pot. This can then be used to increase your company's resilience in tough economic conditions where people aren’t spending as much money as they might have done prior to a downturn. Fortunately, as we have found during the COVID-19 pandemic, the Automotive Locksmith industry is pretty resistant to bad economic situations due to its vital role in keyworkers and the general publics' day-to-day life. In the worst case, however, it can also be necessary to secure financing before a recession. This is not only necessary for businesses making a loss during an economic downturn but can also be a boon for companies to grow when the competition is losing ground. With the right leadership, any business with the right assets can turn a recession into an opportunity, which brings me neatly to my next point.

Streamline your offering.

If times are tough, it's good to be inventive, but it's also good to analyse what parts of your business are really fueling growth and which business activities are providing only limited revenue or are more ancillary to the business rather than essential. It’s also worth looking at the inventory that you stock to see whether ordering less of certain items in future could save you space and money.

Spend on Marketing.

Contrary to a lot of expenses during a recession, marketing is one place where you shouldn’t cut back, as it will likely make you more money when your competitors are being cautious than when all is plain sailing. This is due to the competitiveness of marketing during good times. Paradoxically, the time when you think marketing would be the last thing you should be spending money on is when it is most crucial.

 

Good luck in the coming months!