Ways To Survive A Recession

Increased competition, a shortage of capital to borrow and additional government regulations make owning a profitable business tougher than ever.

Solutions to these challenges exist. By adjusting to the changes, your company can take advantage of available opportunities.

Most small businesses think they have to be large or have lots of money to market, but marketing is simply presenting your product or service to people who need and want it. You can determine where sales are coming from (walk-in customers. referrals or advertising) by analyzing records from the last three years. With this information, you can assemble a mailing list. Send out mailing pieces at least four times a year. Add to the list as you go.

Survivors in the 1990s will be the companies that know the magic of budgeting. Companies are learning to pay attention to where their money is going and cutting costs as necessary. One way to do this is by subcontracting services instead of having employees on payroll. Although the hourly rate is higher, you pay only for the services you use. Try to renegotiate with suppliers, landlords, insurance companies and other vendors to reduce overhead.

The current credit crunch has hurt all businesses, especially smaller businesses. In order to cope with their own problems, many banks have called in existing loans or tightened credit requirements.

The Small Business Administration (SBA) is an often overlooked source of credit. Their loans are more available and affordable than other types offunding and can help a business to grow and profit. While most credit sources are shrinking, SBA loan availability is growing. lts funding which totaled $3.5 billion in 1990 is being increased to $3.6 billion this year.

Profitable companies at least two years old with collateral and a specific use for funds are eligible for SBA financing. Advantages include easier qualifying, more generous financial ratios and longer payback periods than traditional bank loans. Term loans range from seven to 25 years, fully amortized, with no penalties or up front fees. Disadvantages for some companies include dealing with government red tape.

Working with a competent broker, you can qualify for an SBA loan within two days of submitting three years of company tax records and a personal financial statement. Brokers are usually experienced in working with both the SBA and banks and provide the service at no cost to the borrower.

By marketing your business, keeping costs in line and having sufficient capital, you can keep your company in shape to not only survive, but to be a top performer.

Jennifer Leathers, president, Money Source, provided the in/brmation in this article-editor.

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