PULSE / Score Business Corner
written by: Gray Poehler
Stand Up to an Economic Downturn with Good Financial Practices
B
road economic slowdowns can often trickle down to small businesses, includ- ing those in relatively stable industries
or geographic locations. Individuals tend to cut back on discretionary spending while cor- porations curb routine activities, delay major purchases, and shelve new initiatives. For many small businesses with limited
resources, these and other factors often com- bine to pressure bottom lines past the break- ing point, creating a domino effect of other dilemmas such as a credit crunch or layoffs. However, a downturn doesn’t have to
spell disaster for your small business. Good financial management practices will help you to weather even the worst of economic times, and to be ready to capitalize on new opportu- nities which will inevitably come when good times return.
Begin with the basics. Even when times are terrific, no small business can survive without good record keeping, budgeting, cash flow monitoring, and credit management.
Consult your bank. Lenders can tap their vast experience in economic cycles to advise you on issues specific to your business and indus- try. Depending on your projected long-term
32 | Pulse Magazine SWFL
expenses, consider arranging a line of credit in case a cash flow gap occurs.
Be on good terms with your creditors. Falling behind on payments is never the answer, even if it’s “just this once.” Creditors will be more amenable to renegotiating terms to small businesses that they consider to be conscien- tious and reliable.
Watch your receivables. By the same token, you need to stay on top of any outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate when appropriate.
Scrutinize your spending. Rather than arbi- trarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business. This will make it easier to redirect funds to areas that enhance business performance.
Step up your review of financials. Assessing reports weekly or biweekly rather than month- ly will put you in a better position to make informed decisions. Similarly, a monthly or quarterly review of your company’s business plan enables you to adjust strategy and direc- tion as needed to changing market conditions.
Keep marketing in the mix. Look for cost-ef- fective ways to keep your company visible to current customers and potential new markets. They may be ready to restart their spending long before the headlines proclaim an end to the economic crisis.
Utilize local mentoring resources. For more specific and individual help in coping with an uncertain economy, contact SCORE “Coun- selors to America’s Small Business.” SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counsel- ing and training workshops to small business owners nationwide.
About the Writer GRAY POEHLER is a volunteer counselor
with the local Naples Chapter of SCORE. To learn more about management issues facing small business and SCORE’s many work- shops, please call 239-430-0081 or visit their web site. Interested individuals can schedule free
one-on-one counseling with a SCORE volun- teer online at
http://naples.score.org/men- tors.
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