Tips for surviving the downturn

Business best-seller lists teem with titles touting prosperity strategies.  But what if you simply need to keep your business afloat during troublesome times?  Even when difficulty looms, there are still many ways to successfully keep your business going.

1. Begin with your banker. As the saying goes, dig your well before you’re thirsty. The best time to obtain a business loan or line of credit is long before you need it to fund a cash-flow need. The second-best time to do so is before your tap goes completely dry.  With the economists calling for higher interest rates, this is a great time to lock-in today’s rates and term-out line of credit balances.

2. Consider alternative funding. Besides your banker, also keep in mind other potential sources of capital, such as equipment finance companies, stock holdings or even borrowing from family or friends. If possible, avoid turning to credit cards.

3. Manage cash flow. Use on-line banking to monitor your bank balances and have a current cash flow forecast. Also, have a strong system in place to ensure the timely collection of payments – and don’t delay in pursuing overdue debts. If need be, use a collection agency.  Too many small businesses are feeling stressed because they cannot get paid by their customers for work they’ve already done.

4. Reduce expenses. Reducing expenses doesn’t always mean reducing headcount.  Evaluate your top expenses and seek to renegotiate lower prices from key vendors.  You may even want to speak with your landlord about temporary rent reductions.  A landlord may be far more willing to re-negotiate a lease than lose a tenant altogether.

5. Keep marketing yourself. This may be one of the most difficult things to do during a slow time, but there are several inexpensive internet-based ways for you to market your firm.  Many firms trim their marketing costs during tough times; strive to do the opposite.

The recovery is coming, so if you made it this far, just keep pushing because better days are coming; soon.

Hugh W. Connelly, CFA

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avatar Posted by on Apr 18 2010 Filed under Economics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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