| SURVIVAL TIPS FOR ALL KINDS OF
SMALL BUSINESSES You may be in Mail Order, Direct Mail, or you may be a local employer with 150 employees; whichever, however, or whatever you've got to know how to keep your business alive during economic recessions. Anytime the cash flow in a business, large or small, starts to tighten up, the money management of that business has to be run as a 'tight ship'. Some of the things you can and should do including protecting yourself from expenditures made on sudden impulse. We've all bought merchandise or services we really didn't need simply because we were in the mood, or perhaps in response to the flamboyance of the advertising or the persuasiveness of the salesperson. Then we sort of "wake up" a couple of days later and find that we've committed hundreds of pounds of business funds for an item or service that's not essential to the success of our own business, when really pressing items had been waiting for that money. On the other hand, while you may think you cannot afford it, be sure that you don't 'short change' yourself on professional services. This would apply especially during a time of emergency. Anytime you commit yourself and move ahead Many small companies set up advisory boards of outside professional people. These are sometimes known as Power Circles, and, once in place, the business always benefits, especially in times of short operating capital. Such an advisory board or power circle should include a lawyer, an accountant, civic club leaders, owners or managers of businesses similar to yours, and retired executives. Setting up such an advisory board of directors is really quite easy, because most people you ask will be honoured to serve. Once your board is set up, you should meet once a month. Each meeting should be a discussion of your business problems and an input from your advisers relative to possible solutions. These members of your board of advisers should offer you advice as well as alternatives, and provide you with objectivity. No formal decisions need to be made either at your board meetings, or as a result of them, but you should be able to gain a great deal from the suggestions you hear. You will find that most of your customers have the money to pay at least some of what they owe you immediately. To keep them current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they're falling behind. If you develop such a habit as part of your operating procedure, you'll find your invoices will magically be drawn to the front of their piles of bills to pay. While maintaining a courteous attitude, don't be hesitant, or too much of a "nice guy" when it comes to collecting money. Something else that's a very good business practice but which few business owners do is to methodically build a credit rating with their local banks. Particularly when you have a good cash flow, you should borrow œ100 to œ1,000 from your banks every 90 days or so. Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month or so before it's due. By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice. This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favourable. By all means, join your industry's local and national trade associations. Most of these organisations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends. If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall. Customers like to see such "seals of approval" and feel additional confidence in your business when they see them. Still another thing often overlooked. If at all possible, you should have your spouse work in the business with you for at least three or four weeks per year. The important thing is that if for any reason you are not available to run your business, your spouse will be familiar with certain people and situations about your business. These people should include your lawyer, accountant, any consultants or advisers, creditors, and your major suppliers. The long term advantages of having your spouse work four weeks per year in your business with you will greatly outweigh the short term inconvenience. Many couples share responsibility and time entirely, which is in most cases even more desirable. Whenever you can, and as often as you need it, take advantage of whatever free business counselling is available. The Small Business Advisory Service, at the DTI, publish many excellent booklets, check-lists and brochures on quite a large variety of businesses. Many private organisations hold seminars at minimal cost, and often without charge. You should also take advantage of the services offered by your bank and local library. The important thing about running a business is to know the direction in which you're heading; to know on a day to day basis your progress in that very direction; to be aware of what your competitors are doing and to practice good money management at all times. All this will prepare you to recognise potential problems before they arise. In order to survive with a small business, regardless of the economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times. |
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