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February 2008: Tips for Weathering a Slowing Economy |
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Tips for Weathering a Slowing Economy
Small business owners can face economic cycles with confidence.
As the U.S. economy appears to slow down, many small business owners confront new challenges. Unlike corporations, small businesses rarely have the resources to monitor and take action for every issue and trend. Even those owners who have weathered numerous business cycles may meet new circumstances that frustrate their otherwise successful instincts and experience.
Business owners can take a number of steps that will help them overcome the worst of times and achieve success when conditions inevitably improve. SCORE "Counselors to America's Small Business" offers tips on how to deal with a slowing economy:
· Consult your bank about your business's financial status. Lenders have valuable experience with economic cycles, and they can advise you on issues specific to your business and industry. It also may be helpful to arrange a line of credit. You may not need it for several months or at all. If a lag in cash flow occurs, though, you will have a ready source of bridge money in place.
· 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. Your creditors may be experiencing financial difficulties as well. Any flexibility will hinge on whether they perceive you as a reliable partner, or as a risk.
· Keep a close watch on your receivables. Follow up with anyone who owes your company money and make sure they are meeting their terms. Be firm when dealing with problem accounts, but also be willing to negotiate when appropriate. It may take only a matter of months for a struggling customer to become a stable source of income. If you can accommodate such situations without adversely affecting your company's financial position, everybody wins.
· Review your operations and expenses on a regular basis. If you monitor your profitability on a monthly basis, you may want to do it weekly or biweekly during slow economic times. 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 outreach. Many businesses mistakenly see marketing as a luxury when money is tight. This is the time you need marketing most. It reassures your current customers you are still there to serve them, and it can help you reach new markets to sustain your business. Stay "top of mind" by publishing a print or email newsletter.
· Maintain good relationships with your customers. Make sure it is easy for people to contact you, and return calls promptly. Develop a Web site and dedicate a part of your Web site specifically to customer needs. Create a survey and ask your customers how you can serve them better.
· Build a support team. Establish an advisory group with key personnel inside or outside of your business. Attend seminars, read trade publications and join online message boards. Consult outside professionals to get unbiased advice.
To find out more about SCORE and its services, visit www.score.org. Click on "Find SCORE Now" to locate the SCORE office nearest you. Since 1964, SCORE "Counselors to America's Small Business" has helped more than 7.9 million aspiring entrepreneurs and small business owners through counseling and business workshops. More than 10,500 volunteer business counselors in 389 chapters serve their communities through entrepreneur education dedicated to the formation, growth and success of small businesses.
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