Survival Tips For Small Businesses

If you are a small business owner with one or 100 employees, you
need to do the things that will keep your business alive during
economic downturns (I hate the “R” word). Anytime the cash flow in a
business, large or small, starts to tighten up, the money management of
that business has to be run as a "tight ship."

Some of the things you can and should do include protecting
yourself from expenditures made on sudden impulse. We've all
bought merchandise or services we really didn't need simply
because we were in the mood, or perhaps in response to the
flamboyancy of the advertising or the persuasiveness of the
salesperson. Then we sort of "wake up" a couple of days later and
find that we've committed hundreds of dollars of business funds
for an item or service that's not essential to the success of our
own business, when really pressing items had been waiting for
those dollars.

If you are incorporated, you can eliminate these "impulse
purchases" by including in your by-laws a clause that states:
" All purchasing decisions over (a certain amount) are contingent
upon approval by the board of directors." This will force you to
consider any "impulse purchases" of considerable cost, and may
even be a reminder in the case of smaller purchases.

If your business is a partnership, you can state, when faced with
a buying decision, that all purchases are contingent upon the
approval of a third party. In reality, the third party can be
your partner, one of your department heads, or even one of your
suppliers.

If your business is a sole proprietorship, you don't have much to
worry about really, because as an individual you have three days
to think about your purchase, and then to nullify that purchase
if you think you don't really need it or can't afford it.

Don’t Bypass Professional Services

While you may think you cannot afford it, be sure that you don't
" short-change" yourself on professional services. This would
apply especially during a time of emergency. Anytime you commit
yourself and move ahead without completely investigating all the
angles, and preparing yourself for all the contingencies that may
arise, you're skating on thin ice. Regardless of the costs
involved, it always pays off in the long run to seek out the
advice of experienced professionals before embarking on a plan
that could ruin you.

Don’t Be Afraid to Ask for the Money

You will find that most of your customers have the money to pay
at least some of what they owe you immediately. To keep them
current, and the number of accounts receivable in your files to a
minimum, you should call them on the phone and ask for some kind
of explanation why they're falling behind. If you develop such a
habit as part of your operating procedure, you'll find your
invoices will magically be drawn to the front of their piles of
bills to pay. While maintaining a courteous attitude, don't
hesitant, or too much of a "nice guy" when it comes to collecting
money. I recommend getting at least half down for every item ordered
by the client, but you can even offer “bonuses” for payment in full. It’s
amazing how many clients will pay in full, just to get a $29 product for
free. What a boost that is to your bottom line, and resolving some of
your cash flow concerns.

Something else that's a very good business practice, but which
few business owners do is to methodically build a credit rating
with their local banks. Particularly when you have a good cash
flow, you should borrow $100 to $1,000 from your banks every 90
days or so. Simply borrow the money, and place it in an interest
bearing account, and then pay it all back at least a month or so
before it's due. By doing this, you will increase the borrowing
power of your signature, and strengthen your ability to obtain
needed financing on short notice. This is a kind of business
leverage that will be of great value to you if or whenever your
cash position becomes less favorable.

Free Business Counseling?

Whenever you can, and as often as you need it, take advantage of
whatever free business counseling is available. The Small
Business Administration published many excellent booklets,
checklist and brochures on quite a large variety of businesses.
these publications are available through the U.S.Government
printing office. Most local universities, and many private
organizations hold seminars at minimal cost, and often without
charge. You should also take advantage of the services offered by
your bank and local library.

The important thing about running a small business is to know the
direction in which you're heading; to know on a day-to-day basis
your progress in that very direction; to be aware of what your
competitors are doing and to practice good money management at
all times. All this will prepare you to recognize potential
problems before they arise.

In order to survive with a small business, regardless of the
economic climate, it is essential to surround yourself with smart
people, and practice sound business management at all times.

I sincerely hope these few suggestions will help your business.

David Hilgendorf, who has managed marketing for his retail and internet
companies, is a firm believer in measurable results in all marketing.
Find out more about “results marketing” at www.ismall.com/saratoga, or
feel free to contact him at drhilgendorf@sbcglobal.net