ExecFall09_18_20:128_loyolaSpring_10_17 9/14/09 10:51 AM Page 3
Tough economic times, tight credit, and recession are words that usually strike fear in the heart of a small business owner. While the small business can be especially vulnerable in an uncertain marketplace, there are also many opportunities for success. A proactive approach will enhance the prospects for short-term survival and can facilitate long-term success. Here are some tips for navigating the current economic crisis.
CashIs IsKing King 1. 1.Cash The most important step is to manage your cash flow. This can be accomplished by developing an up-todate accurate cash flow budget for at least the next 12 months. This will require that you understand all monthly operational costs and determine your cash flow break-even point. If this analysis does not prove as liquid as you need or desire, then you will have to ask some serious questions. Can any monthly operating costs be reduced? Do you have any unused assets that can be sold? Are there any receivables that can be collected? Are employee bonuses based on generating measurable results? Can inventory costs be reduced through consignment sales? Can you request or negotiate extended terms from vendors? Do you overspend on needless office supplies like premium paper, bottled water, and gourmet coffees? What is your debt capacity? Can your debt be restructured? It is always important to know your seasonality and precisely when your cash shortages will occur, but this is even more critical in tough economic times. Therefore, the time to be cautious with cash is while it is still flowing, not when it is critical. Fall 2009 www.loyno.edu
2.2.Failing FailingToToPlan Plan IsIsPlanning PlanningToToFailFail This is the perfect time to evaluate your business continuity and business interruption preparedness. However, a continuity plan is not just for natural and big disasters. A continuity plan should plan for the small everyday glitches such as a computer crash, an employee error, or a power outage. Generally, when a small business is well prepared for the high frequency, but low impact business interruption, then they will be much more prepared for the low frequency, but high impact interruptions. A well thought out continuity plan implemented on a daily basis can increase operating efficiency, reduce operating costs, and decrease the amount of down time in any type of business interruption, including tough economic times. Remember the old motto, “tough times never last but tough small businesses do.”
3.3.Think ThinkOutside OutsideTheTheBoxBox Getting customers through the door will likely require you to reevaluate your business and the way you do business. It may require that you let go of traditional methods such as newspaper advertising and utilize the Internet or create a website. Likewise, don’t underestimate social networking, other media, and blogging. This may be the perfect time to investigate that class on Twitter or website design you’ve been putting off. Can you bring your business to your customers instead of waiting for them to come to you? Are there other target markets that you can attract? For example, a fine dining restaurant that
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