2009 has started with disturbing news of higher unemployment, brought on by the turbulence in the financial markets and downturns in sectors like tourism, construction, and the motor trade.
The good news for the pharmacy sector is that consumers will still need to meet their health needs. Also, reduced interest rates will provide opportunities for refinancing.
Accounting and advising group, WHK, recommends five Downturn Readiness Tips for smart business people wanting to avoid the worst of the downturn.
Downturn Tip #1: Plan
The top priority is to prepare an evidence based, insightful business plan with clear goals, targeted marketing and plans to create productive, cost-effective systems. Many pharmacies have plans but these are really budgets for projected sales and costs and lack financial analysis, customer research, staff input and competitor comparisons. Without this, the plans are more ‘wish lists’ than the evidence-based, insightful plans that WHK recommends.
Downturn Tip #2: Measure
The second tip is to create measurements of key financial data that gives timely feedback on how the business is going. Most pharmacies have point of sale systems that give information on sales and gross profits, but more is needed. A business dashboard that tracks monthly ratios of sales and profit trends, return on owners equity, short term risk ratios (current and liquid ratio), interest cover (especially if there is large amounts of debt), debt to equity ratios, sales per employee, stock turnover by month and costs compared to benchmarks* on key areas such as staff, occupancy and advertising. Using the Analysis – One forecast tool, WHK is able to model the likely impacts of changes to key business drivers and generate a view of forecast financial performance.
Downturn Tip #3: Innovate
In a downturn, the level of price-based competition increases as competitors respond to consumers concerns about disposable income. Avoid getting into a price war as much as possible by innovating through offering new products and services, entering new markets, diversifying or finding ways to lock in current customers. Find innovative ways of promoting and advertising rather than cutting this essential part of your business. Find government grants to subsidise your activities.
Downturn Tip #4: Network
As competition increases look for non-competitive allies to network with regarding sharing costs, cross-promoting and sharing knowledge. A downturn is the time to lift you head up and participate in industry forums and to look for allies who can work with you not against you.
* If you would like to receive more information regarding our benchmarking service, please contact us.
Downturn Tip #5: Work smarter
The final tip is to see how you can educate yourself and your team to work smarter. Training is generally one of the areas cut in a recession. Avoid the temptation and invest more in practical programmes that focus on doing work better.
WHK Group is Australia’s fifth largest accounting firm, with a focus on small to medium enterprises. They can access government grants for eligible businesses and assist you to implement these Five Downturn Readiness Tips.
Principal, WHK
Mr Allan Godbee
P: (07) 5597 0655
E: allan.godbee@whk.com.au
18 Carrara St
Benowa, QLD 4217
Gold Coast – Toowoomba – Dalby – Chinchilla
Pittsworth – Murwillumbah – Cabarita Beach
better advice for a better life..