For many small businesses with limited resources, these and
other factors often combine to pressure bottom lines past the
breaking point, creating a domino effect of other dilemmas such
as a credit crunch or layoffs.
A downturn doesn't have to spell disaster for your small
business, however.Good financial management practices will help
you weather even the worst of economic times, and be ready to
capitalize on new opportunities will inevitably come with good
times return.
Begin with the basics.Even when times are terrific, no
small business can survive without good recordkeeping,
budgeting, cash flow monitoring, and credit management.
Consult your bank.Lenders can tap their vast
experience in economic cycles to advise you on issues specific
to your business and industry.Depending on your projected
long-term expenses, consider arranging a line of credit in case
a cash flow gap occurs.
Be on good terms with your creditors.Falling behind on
payments is never the answer, even if it's "just this
once."Creditors will be more amenable to renegotiating terms to
small businesses they consider to be conscientious and reliable.
Watch your receivables.By the same token, you need to
stay on top of any outstanding debts to your company,
particularly problem accounts.Be firm, but also willing to
negotiate where appropriate.
Scrutinize your spending.Rather than arbitrarily
slashing your budget, strive to spend only on those things that
have a justifiable positive effect on your business.That will
make it easier to redirect money to areas that enhance business
performance.
Step up your review of financials.Assessing your
reports weekly or biweekly rather than monthly will put you in a
better position to make informed decisions.Similarly, a monthly
or quarterly review your business plan enables you to adjust
your strategy and direction to changing market conditions.
Keep marketing in the mix.Look for cost-effective ways
to keep your company visible to current customers and potential
new markets.They may be ready to restart their spending long
before the headlines proclaim an end to the economic crisis.
For more help in coping with an uncertain economy, contact
SCORE "Counselors to America's Small Business."SCORE is a
nonprofit organization of more than 10,500 volunteer business
counselors who provide free, confidential business counseling
and training workshops to small business owners. Call
1-408-288-8479 for the Silicon Valley SCORE chapter, or find a
counselor online on our web site at
www.svscore.org.
