No one’s denying it—times are tough, and small businesses everywhere are feeling the brunt of the slumping economy. Even businesses who have never before felt a cash crunch are beginning to wonder how they will handle things if sales don’t increase—soon. The worst thing a business owner can do when facing a financial crisis is to continue on and simply hope for the better. Instead, it will be necessary to become proactive and face the challenges head on. Your first order of the day should be to look for ways to increase your cash flow—a valuable asset in a financial crisis. By being practical about the situation and looking for real solutions, you’ll likely be able to pull your business through the worst of times. Let’s look at a few sensible steps you can take now.
Aside from the obvious fact that you shouldn’t be spending money on unnecessary items right now, you should go even further to evaluate what your business does and does not buy. Look at your purchases in terms of cash flow—if it will add to your income stream in the short term, then by all means make the investment, but if it won’t contribute to your financial health, then put off the purchase until your business is on more stable ground. Did you notice that I used the phrase “short term?” It wouldn’t be a wise decision in tough financial times to buy a big ticket item that will contribute to profits in the future. You must think in terms of “what will it do me right now” with every purchase that you make.
Many business owners have large pieces of equipment or costly items that they either no longer have a use for, or use so infrequently that it makes having them financially irresponsible. Take a look around your business, and see if you can’t create an inventory of equipment or other assets that you can sell. Remember, you’re goal is to build up some cash reserves, and if you have unused items sitting around collecting dust, you should easily be able to convert it into something that you need more.
If you’re a follower of FeeFighters, then you understand their philosophy that a business owner shouldn’t pay more than they have to, and that goes for every area of your business. This is a good time to compare your insurance, phone, Internet and any other fees that you pay on a reoccurring basis. But don’t only do comparison shopping, also look for ways to lower your rates. For instance, if you agreed to a higher deductable on some of your insurance policies, could you lower your monthly payments? Be sure to talk to your bank about fees associated with your accounts, as well as the professionals that you do business with like lawyers and accountants and ask for billing breaks. After all, they’re likely in a race to keep afloat financially as well, and if they know you might start looking for someone less expensive, they may reduce their rates temporarily in order to keep your business.
Those business owners who remain financially vigilant, proactive and willing to build their cash reserves in unconventional ways are those who will likely survive this economic slump. You can be of the “lucky ones” by playing it smart now.