Staying afloat in tough financial times
The financial savvy of business owners varies greatly. Some do a fabulous job of handling money, spending wisely and so forth. Some have savings set aside to get through tough times. Others just pay the bills when they come in (or not) and don't even have a basic business budget. Following are some basic tips to help your business stay afloat in tough financial times:
Budget - sometimes entrepreneurs focus so much on the many facets of running a small business, they overlook this very basic financial tool. If you have no clue where to start, look at your historical spending and break it down by category. (E.g., 32% rent, 17% supplies, 8% advertising, etc.) Use these percentages as a guideline in coming up with a budget (and at the same time look out for areas you might need to adjust). Then, stick to the budget!
Talk it Out! If your area has been hit with tough times, you aren't alone. So, rather than hiding the bills (I recently spoke with a small business owner who talked of unpaid bills being stashed in the rafters because the person responsible for handling them simply didn't pay), talk with your suppliers, vendors, whomever. Honestly explain your situation and ask for REASONABLE relief (say, changing terms from net15 to net30, taking 5% off the bill or whatever. (Important caveat - insolvency can mean default under some contracts and virtually everything you say could be used for "debt collection")
Tighten the Belt. Yes, the national coffee shop latte seems a necessity for some business owners, but do you really NEED to spend $60 a month for a daily mocha-java-special with whipped cream on top? Pick up a coffee pot at a yardsale and stick it in your breakroom & possibly add $800/year to add to your pocket. Same thing goes for eating out - I'll admit that a good gyro or fresh salad from the corner lunch shop tastes great, but you can really save money by "brown bagging" it! (I overheard a recent call-in from a gentleman who after tracking spending for one month was astonished to learn that he spent $500/month on eating out. $6000/year isn't chump change for many business owners).
Barter. Barter doesn't need to mean under-the-table seedy side deals. If your advertising firm needs new floors and the flooring installer needs some flyers and a radio spot done, it could be a win-win situation! Some sites like craigslist even have barter sections to help you find a good swap. Keep in mind that you will need to report the value of any services you received as income for tax purposes.
Re-evaluate your business. This one is tough, but some businesses have found that new strategies prompted by tough financial times actually improve their entire business.
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