SURVIVAL TIPS FOR ALL KINDS OF SMALL BUSINESSES
You may be in Mail Order, Direct Mail, or you may be a local
employer with 150 employees; whichever, however, or whatever -
you've got to know how to keep your business alive during economic
recessions.
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 including 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
flamboyance 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 that
money.
On the other hand, 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 this 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.
Particularly when sales are down, you must be "hard nosed" with
people trying to sell you luxuries for your business.
When business is booming, you undoubtedly will allow sales people
to show you new models of equipment or a new line of supplies; but
when your business is down, skip the entertaining frills and
concentrate on the basics.
Great care must be taken however to maintain costs, yet allow
these sellers to consider you a friend and call back at another
time.
Your company's books should reflect your way of thinking, and
whoever maintains them should generate information according to
your policies.
Thus, you should hire an outside accountant or accounting firm to
figure your return on your investment, as well as the turnover on
your accounts receivable and inventory.
Such an audit or survey should focus in depth on any or every item
within your financial statement that merits special attention. In
this way, you'll probably uncover any potential financial problems
before they become readily apparent, and certainly before they
could get out of hand.
Many small companies set up advisory boards of outside
professional people.
These are sometimes known as Power Circles, and, once in place,
the business always benefits, especially in times of short
operating capital.
Such an advisory board or power circle should include a lawyer, an
accountant, civic club leaders, owners or managers of businesses
similar to yours, and retired executives.
Setting up such an advisory board of directors is really quite
easy, because most people you ask will be honoured to serve.
Once your board is set up, you should meet once a month.
Each meeting should be a discussion of your business problems and
an input from your advisors relative to possible solutions.
These members of your board of advisors should offer you advice as
well as alternatives, and provide you with objectivity.
No formal decisions need to be made either at your board meetings,
or as a result of them, but you should be able to gain a great
deal from the suggestions you hear.
You will find that most of your customers have the money to pay at
least some of what they owe you immediately.
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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 be hesitant, or too
much of a "nice guy" when it comes to collecting money.
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
$200 to $2,000 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.
By all means, join your industry's local and national trade
associations.
Most of these organisations have a wealth of information available
on everything from details on your competitors to average industry
sales figures, new products, services, and trends.
If you are given a membership certificate or wall plaque, you
should display these conspicuously on your office wall.
Customers like to see such "seals of approval" and feel additional
confidence in your business when they see them.
Still another thing often overlooked. If at all possible, you
should have your spouse work in the business with you for at least
three or four weeks per year.
The important thing is that if for any reason you are not
available to run your business, your spouse will be familiar with
certain people and situations about your business.
These people should include your lawyer, accountant, any
consultants or advisors, creditors, and your major suppliers.
The long term advantages of having your spouse work four weeks per
year in your business with you will greatly outweigh the short
term inconvenience.
Many couples share responsibility and time entirely, which is in
most cases even more desirable.
Whenever you can, and as often as you need it, take advantage of
whatever free business counselling is available.
The Small Business Advisory Service, at the DTI, publish many
excellent booklets, checklists and brochures on quite a large
variety of businesses.
Many private organisations 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 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 recognise 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.
