Broad economic slowdowns can often trickle down to small businesses, including those in relatively stable industries. But a downturn does not have to spell disaster for your small business.
Good financial management practices will help you weather even the worst of economic times and be ready to capitalize on new opportunities, which inevitably will come when good times return.
Begin with the basics. When times are terrific, no small business can survive without good recordkeeping, budgeting and cash flow monitoring and credit management.
Be on good terms with your creditors. Falling behind on payments is never the answer, even if it is just one time. Creditors will be more amenable to renegotiating terms with small businesses they consider to be conscientious and reliable.
Watch your receivables. You need to stay on top of outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate where appropriate.
Scrutinize your spending. Rather than arbitrarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business.
Step up your review of financials. Assessing your reports weekly or biweekly rather than monthly will put you in a better position to make informed decisions.
Keep marketing in the mix. Look for cost-effective ways to keep your company visible to current customers and potential new markets. They might be ready to restart their spending long before the headlines proclaim an end to the economic crisis.
Stephen L. Rosenstein is co-chairman of Greater Baltimore SCORE Chapter No. 3. Call 410-962-2233 to speak to a SCORE counselor or visit www.scorebaltimore.org. To send a question to SCORE representatives, e-mail email@example.com.