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Business: Survival of the fittest

Unless you are relying on luck, only those who really know their business and the market are going to be around to see much of 2010. Rowena Herdman-Smith's top tips for managing customers and suppliers.

Firms going bust, a credit squeeze, spiralling unemployment and a nightmare on the High Street... the economic picture is certainly bleak. But there are tactics that entrepreneurs, directors, professionals and retailers can use to emerge relatively unscathed from recession. It's time for strong leadership, good communication skills, tackling stress and a positive outlook. Director asked business experts from a range of sectors for their tips on weathering the storm and how to profit when the dust settles

Know the law

Rowena Herdman-Smith, a partner at commercial law firm Mishcon de Reya

Unless you are relying on luck, only those who really know their business and the market are going to be around to see much of 2010. My top tips for managing customers and suppliers fall into two categories. They are:

Understand your agreements

• What agreements do you have in place? Are they in writing? You don't need a written contract to have a binding agreement, but it certainly helps regulate a business relationship and can avoid unnecessary legal disputes.
• What do those contracts actually say? We meet clients all the time who haven't read agreements that may be key to their business. Alternatively, they know the bits which work day to day, but have never considered what happens if something goes wrong.
• Deal with any issue that arises, such as non-payment, using the contract terms. If you want to do something differently, get professional advice first. You may compromise your company's rights if you don't.
• If you need (or are asked) to change contract terms, consider how best this can be achieved and whether this is to be permanent or temporary (such as a change to payment terms).
• Don't allow your company to be in default under
  a contract unless it is a calculated decision. Seek professional advice first.
• Many contracts are automatically renewed if no action is taken. But this may not be the time to allow such renewals. You may be missing an opportunity to renegotiate or put work back out to tender.

Know your customers and suppliers

• Keep in touch with them on a regular basis. Manage your exposure to them but understand their issues.
• Do what you can to find out how their businesses are faring. That includes checking annual returns.
• Manage the information about your business that they receive.
• Monitor your competitors - you may be able to pick off their key suppliers and/or customers.
   

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