Is your business robust?

Businesses need to look into ways of securing their future, the findings of a new report suggest.

More than a quarter of small businesses expect to fold by 2014, according to the study conducted by Francis Greene, associate professor at Warwick Business School.

One in six businesses owners believe that their venture will not even last the year. It notes that many businesses are vulnerable, with half of micro-businesses relying on personal sources of finance to fund their cash flow needs.

To combat the trend, Greene offers some advice on how to manage cash flow, including using credit agencies to check the credit worthiness of customers, invoicing within a day of a chargeable event, charging interest for late payment and offering discounts for prompt payment.

But there are other things that businesses can do to improve their prospects, even if they are not directly related to cash flow, says Mike Ogilve of business advisory The Profit Team. "Too many businesses are making the mistake of believing that all they have to offer is effectively a commodity, where the only thing that differentiates themselves from their competition is price - so they pursue volume through discounting which will lead to failure, be that quick or slow," he tells Business Sense.

"To survive, businesses must do three things urgently. Firstly, only stock and sell items or services that customers want to buy (not what you would like your customers to buy). Secondly, identify at least three new ways that customers will appreciate to differentiate your service from your competition that will be perceived as adding value to your 'product'. Thirdly, explain these differences and ask existing customers to talk about you and spread the word - prospects will believe what others say about you rather than what you say about yourself."

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