How to Rescue Your Small Business During Tough Times
When your small business runs into trouble—whether due to economic downturn or personal hardship—it’s difficult to know what steps to take to ensure your company’s survival. Typically, the knee-jerk reaction is to reduce advertising and promotional expenditures, often in combination with employee layoffs. The reality is that neither tactic is the right one for a struggling enterprise: top-notch customer service is crucial to a company’s success even in the worst of times, and studies have shown that folks who maintain or increase advertising during slow periods wind up outselling rivals who cut back.
Entrepreneurs should instead focus on ways to save money by slashing fixed costs. The following five tips outline ways to give your starving organization the transfusion it needs to stay alive and thrive.
List Your Needs and Wants
Your first step towards rescuing your small business is to cut all non-strategic costs. Often this is as simple as determining whether an expenditure is something you need to do versus something you simply want to do. Begin by cutting in the areas of hospitality, travel that doesn’t generate revenue (like conferences), and non-incentive based bonuses. But don’t stop there. Look into the way your company uses resources, such as energy and even disposable items. One clever establishment discovered it could save $100 a month on Styrofoam coffee cups just by having all its employees bring a mug from home.
Earn Points Like a Champ
So many industries offer points programs now, we’re all practically drowning in plastic membership key cards. Use these programs strategically when you make business purchases and you’ll be pleasantly surprised by how much you can save. When it comes to your credit cards, do your research and apply for those that offer points you can use towards future purchases, cash back, airline tickets or hotel stays.
Monitor Inventory
When faced with dire circumstances, having more liquidity in your business is crucial. One way to accomplish this is by converting your inventory into cash. For instance, if your company traditionally stocks 200 units of each of its slowest-moving products, consider cutting that number to 75 each. By keeping only what you absolutely need in stock, you’ll have more cash free to use in other areas.
Negotiate
If the cause of your business woes is due to a depressed economic climate, use this as an opportunity to ask your landlord and suppliers for short-term price reductions. Often the desire to keep you as a customer when your purveyors themselves are struggling is enough incentive for them to work with you on price. In all circumstances, ask the companies you regularly order from if they offer a discount for paying bills before they’re due, and receive perks such as 2% off for payment within ten days.
You can also suggest a barter arrangement to your distributors and trade goods and services in exchange for credits rather than cash. Or take advantage of collective buying power by partnering with other businesses that use the same suppliers. Combining orders from multiple companies into one large order often motivates suppliers to slash prices, sometimes by as much as 25%.
Know Where to Get Help
Finding ways to cut costs and infuse more cash into your company is just part of a successful survival strategy. Pair these tips with the innovative use of cheap marketing and diversification as a means to increase revenues, and your business will be well on the way not only to recovery, but to prosperity.
“Are your money-saving measures still not cutting it? While its clear that the savviest business people know when it’s time to ask for help, some entrepreneurs feel left without options due to a less than perfect FICO score. The good news is that bad credit business loans with incredibly fast turnaround times are available when having cash in hand now seems like the only way to remain solvent.”
Author’s Bio: Peter Dav is an experienced writer and he is interested in writing articles on Finance, Business etc. He suggests not taking bad credit business loans from untrusted finance companies.
Category: Business
