Tips for Surviving this Economy

Most entrepreneurs hate dealing with the most important part of their business, the finances! A successful business owner must understand how much money is coming in and how much is spent. In a downturn economy, it is even more critical to keep an eye on the cash flow. This is true for both retail and consulting business models.

The overhead costs for retail businesses can be crushing. Regardless of the number of customers that walk in, the rent and utilities must be paid. An article, Strategies for an Economic Downturn, put together by Virginia Small Business Development Center (SBDC), has a checklist of steps to take in order to stay viable even when sales have slowed. Although truly relevant for business owners struggling to stay open, the advice is a good reminder for all business owners about the importance of tightening your cash flow cycle, targeting your marketing, and staying on top of your business. When struggling to make ends meet, business owners tend to run around doing everything just to stay in business. Remember to give yourself the time to stop, breath and really look at your business model and finances. Are their ways to improve how quickly you get paid? Can you negotiate to lower your rent? Have you contacted your most frequent customers with incentives to come in? Rather than work frantically in your business, think about ways to cut costs, tighten efficiencies and do low cost marketing.

Although they do not have the overhead of their retailing counterparts, consulting businesses are also struggling to find clients. The second article, Structural Improvements, from CFO.com, discusses ways that professional services can restructure their payment processes to make it easier on cash-strapped clients. Although the article is looking at just a few professions, it is good to think about how your payment structure can attract clients. Remember, everyone is cash-strapped right now. Try to figure out ways that let clients distribute costs over time, or plan for a fixed cost, rather than an hourly rate. The more you work with your client to create a win/win payment system the more they will want to do business with you.