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Sunday
Mar082009

Surviving a bad economy

If you are getting nervous that the economy is going to effect your business, there is no time like right now to gear up and make some changes to counter that negativity.

First, get going. Don't wait until the timing is too late!  Review your numbers. Where can you cut back, where do you need to plan ahead? Get out the pencil and paper-  start making a plan of attack. Get rid of extras, spend the money only on know money makers, keep inventory low.

Second-  Capture all the cash flow you can.  Make a commitment to review your Accounts Receivable on a regular basis.  Get on the phone and call the people who are 15 to 20 days behind, let them know you are expecting payment.  Believe me, if a company owes money to two different companies, but one is calling and asking for payment on a regular basis, guess who's getting their cash first?  Don't be complacent.  You will need every  penny in your accounts so you don't have to spend extra on credit.  Don't become your customer's banker, which is the case if they are later that 30 days past due. Charge interest!  I've seen companies pay immediately when they realize they are incurring interest charges.

Third- Look at your own payables.  Can you time purchases better, get longer payment terms, spread out payments just a few extra days?  Place orders later in the cycle?

Four-Be very careful of credit.  Even though most small companies start out using credit cards to supplement their existence, don't continue in that frame of mind. You are putting your company at risk. Credit card companies are presently contacting many small businesses and telling them their interest will be going up. They can either ok it, or pay off the card now.  This is happening to very credit worthy companies, and under funded companies alike.  If all your credit cards go up 4-5% points, will that put you in a terrible constraint?   The best thing you can do for your company is to pay down credit card debt.

Remember, being Pro Active before the need arises is how to ride out the economy until it improves. Planning for bad times ahead of their actual arrival will help you weather the storm.

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