A Small Business Plan for Uncertain Times

It's official: these are hard financial times. Many small business owners are feeling the pinch, and you may be one of them. Here are some tips to help you swim against the tide and help you keep your head above water.

Review your Business Plan

Your business plan represents the roadmap your company is following. Consider reviewing it as if through the eyes of someone new to the area. Is it still the best possible route to where you want to go, or should you consider some change in direction? It may be valuable to create an advisory team from your circle of business contacts to help you with this task.

Keep Current and Vigilant

When the times are changing, you need current and accurate financial information on which to base your decisions. Keep a close eye on all your expenses. If you must cut your expenses, consider reducing expenditures only on goods or services that are no longer profitable. And try not to slash all of your advertising budget. If people don't know you're there, before long you may not be.

Be careful about the urge to cut your prices without exploring alternatives or without adequate justification. Doing so might lead to a temporary swell in your sales volume, but it will also undercut your margins, and may dilute your brand name. You might also want to continue spending money on development. The hard times will eventually pass, and when they do you'll want to have new items or services for your customers or clients to buy.

Examine your revenue stream, and think about ways to pursue any delinquent accounts receivable. Be careful of the credit terms you extend to your customers, especially new ones; if they can't meet their obligations, you might fall behind on your own. Try to maintain a healthy cash flow, and create a cash reserve to cover times when your accounts receivable may be slow.

Finally, meet with your banker. Try to keep a line of credit available to hedge against potentially declining revenues. Perhaps you're thinking you should defer making the capital improvements you were planning. However, while interest rates are low, consider if this would be a good time to lock in financing for them.

Work with me Here

Your existing customer base may be your best prospects for new business, so remain in close contact with them. Determine their needs and seek to help them meet those needs. Consider offering them discounts in exchange for advance payment or long-term contracts with you. And always provide them with excellent customer service. In return, they may refer other potential customers or clients to you.

By the same token, work closely with your own suppliers. Agree to long-term contracts in exchange for a fixed price, if doing so would be beneficial to you. Consider seeking discounts if you pay in cash, or asking for longer payment terms if you are willing to pay full price. Be willing to contract for supplies at the regular price if they will give you great discounts on any of their own overstock that you might need. If you are open about your needs with each other, you might be able to create win-win situations for you both.

Value Your Employees

You no doubt have good people working for you, and they are a valuable part of what has made your business thrive. They have a stake in your business, too. Try to find ways (even if only simple gestures) to thank them for jobs well done. Look for ways to boost productivity, and reward those employees who meet the challenge of becoming even more productive.