(The following article first appeared in the August 2008 edition of Corporate Report Wisconsin.)
If challenging times bring out the best in people, then these are great times for small business owners. Those who thrive amid today’s darkening economy are those who are prepared.
Fortunately, if you’re a small business owner, you’re in a unique position to not only survive tough times, but actually to turn them to your advantage. That’s because you have two key advantages over larger companies: flexibility and the ability to respond quickly to changing economic conditions.
What can you do to thrive during changeable economic times and position your business for future growth? A lot. Here are some common sense suggestions:
- Devote two extra hours a day to business. Hard work is often the most important ingredient for success. When times get tough, that’s the time to hunker down and focus extra effort on business. Look at the difference two additional hours a day can make. If you come in at seven rather than eight and stay until six rather than five, that adds up to ten more hours a week, 42 hours a month, or an additional 13 weeks a year (more than a full quarter). You’ll be amazed at how devoting more time to the business can help improve productivity and help keep your business stable doing unstable times.
- Scrutinize areas of profit and loss. Study your books to better understand which activities bring the best returns and which either lose money or generate only a marginal profit. Reminder: You’re in business to make money. Focus on activities that accomplish this goal and stop doing things that don’t.
- Plan. This is not the time to stick your head in the sand and wait for things to work out by themselves. The bottom line doesn’t take care of itself. Be proactive: Develop a 12-month strategy, and be prepared to revise it quarterly. That way, you won’t be caught by surprises, no matter what the economy does. If you’re like many of us, this may be the first time you’ve engaged in serious planning. That’s because many small business owners have simply let the long-term direction of their companies evolve on its own. If this sounds like you, now is the time to make a change…and take charge.
- Lock in long-term contracts. When I saw the economic storm clouds gathering on the horizon, I contacted some older clients and offered a price cut through December 31 in exchange for a long-term arrangement that would not only secure and stabilize my income, but also help them out. Look for ways to keep that income stream flowing.
- Review every expense…every day! Watch your cash flow like never before, and take steps to conserve your cash. Otherwise, you could end up limping along on a shoestring, your back to the wall, surviving day to day. Make reviewing your books and cash position a daily ritual. Ask yourself about every expense: “Is this absolutely essential?” If the answer isn’t a resounding “You bet!” then think twice before taking it on.
- Watch your credit line. This may not be the time to borrow money. Consider postponing expansion plans until the economy decides which way it will go.
- Cut fat…not muscle, and keep your eye on the bottom line. Avoid across-the-board cuts. You could end up starving the goose that lays the golden eggs. Instead, analyze and revise your marketing and other business plans, making sure you don’t eliminate assets, activities and expenses that positively impact your bottom line.
These are just some of the things you can do to help make sure your business keeps going — and even prospers — during these tough economic times.
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