Dealing with an uncertain economy is never easy, especially for small businesses. Unlike their
larger counterparts, small businesses rarely have the resources to monitor and take corrective
action for every trend and issue. And even those owners who have weathered numerous business
cycles may be faced with new circumstances that confound their otherwise successful instincts and
While there is no crystal ball that accurately predicts the future, small business owners can take a
number of steps that will help their enterprises endure the worst of times, and position them for
success when conditions inevitably improve.
Consult your bank about your business’s financial status. Lenders have vast
experience in economic cycles, and can advise you on issues specific to your business and
industry. It may also be helpful to arrange a line of credit. You may not need it for several
months or at all. But if a lag in cash flow occurs, you will have a ready source of bridge money
Make sure you have good relations with your creditors. You may find it necessary to
renegotiate terms, but overdue bills and inconsistent payment practices will not help your
position. What’s more, your creditors may be experiencing financial difficulties as well. Any
flexibility will hinge on whether they perceive you as a reliable partner, or a risk.
Similarly, keep a close watch on your receivables. Follow up with whoever owes your
company money and make sure they are meeting their terms. Be firm when dealing problem
accounts, but also be willing to negotiate where appropriate. It may take only a matter of
months for a struggling customer can become a highly stable source of income. If you can
accommodate such situations without adversely affecting your company’s financial position,
Make sure expenditures can be justified, and that they contribute to the financial
health of your business. You may find it necessary to redirect money to areas that will
enhance business performance. If you carry an inventory of products, check the accuracy of
your records and procedures to prevent losses. It may also be helpful to adjust your order
amounts to match projected sales.
Review your operations and expenses on a regular basis. If you monitor your
profitability on a monthly basis, it’s a good idea to do it weekly or biweekly during slow
economic times. Likewise, review your business plan more often. Monthly or quarterly reviews
will make it easier to make adjustments and keep your business on track.
Step up your marketing efforts. Many businesses mistakenly see marketing as a luxury
when money is tight. The truth is that this is the time you need marketing most. Along with
reassuring your current customers that you are still there to serve them, marketing can help
you reach new markets that will sustain your business now, and facilitate its growth in the
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