Surviving a Business Slowdown
Side Note: This article was written in 2010 for 4hb.com. Originally published at http://www.4hb.com/news-20100628-1849.html
No one likes to think about downturns in their business. However, should it happen, the sooner you see it coming, the better prepared you will be.
Prepare your financial statements monthly . Look for problems before they arrive -- not after.
There are only two ways to improve your finances -- increase your income or decrease your expenses. Increasing your income often takes time, but decreasing your expenses can be immediate. Start by looking for specific expenses you can quickly cut if sales slow down.
Do not wait until it is too late to build customer loyalty. Repeat customers are the easiest sales. Start now and develop a customer loyalty program to retain existing customers to keep the income stream going now and through hard times.
Employees are definitely one of your most critical assets but good employees are difficult to replace. Before contemplating any staff cuts, be extra sure your customer service and production will not be adversely impacted.
It seems obvious to cut back on marketing costs when things get tight, but when sales are slow, you might actually need to increase marketing efforts and costs instead of cutting back.
Having product is necessary to make sales, but do not let excessive inventory create cash-flow problems in your business.
Not many banks are not interested in lending you money when you are experiencing business difficulties. Make arrangements during the good times to protect yourself with a line of credit before you actually need it.
If your business extends credit to customers, ensure you have a sound credit policy and follow it. Do not let customer credit become bad debt and become a financial burden on your business.
This collection of best practices and tips should help you navigate your business through any downturns and prepare for better times.
by Brad Trupp © 2010