Survival Tips For

Survival Tips For



SURVIVAL TIPS for​
SMALL BUSINESSES
You may be in​ Mail Order, Direct Mail, or​ you may be a​ local
merchant 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 include 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
flamboyancy 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​ dollars 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
those dollars.
If you are incorporated, you can eliminate these impulse
purchases by including in​ your by-laws a​ clause that states:
All purchasing decisions over (a certain amount) are contingent
upon approval by the​ board of​ directors .​
This will force you to
consider any impulse purchases of​ considerable cost, and​ may
even be a​ reminder in​ the​ case of​ smaller purchases.
If your business is​ a​ partnership, you can state, when faced with
a buying decision, that all purchases are contingent upon the
approval of​ a​ third party .​
In reality, the​ third party can be
your partner, one of​ your department heads, or​ even one of​ your
suppliers.
If your business is​ a​ sole proprietorship, you don't have much to
worry about really, because as​ an​ individual you have three days
to think about your purchase, and​ then to​ nullify that purchase
if you think you don't really need it​ or​ can't afford it.
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 without completely investigating all the
angles, and​ preparing yourself for​ all the​ contingencies that may
arise, you're skating on thin ice .​
Regardless of​ the​ costs
involved, it​ always pays off in​ the​ long run to​ seek out the
advice of​ experienced professionals before embarking on a​ plan
that could ruin you.
As an​ example, an​ experienced business consultant can fill you in
on the​ 1244 stock advantages .​
Getting eligibility for​ the​ 1244
stock category is​ a​ very simple process, but one with tremendous
benefits to​ your business.
The 1244 stock encourages investors to​ put equity capital into
your business because in​ the​ event of​ a​ loss, amounts up to​ the
entire sum of​ the​ investment can be written off in​ the​ current
year .​
Without the​ 1244 classification, any losses would have to
be spread over several years, and​ this, of​ course, would greatly
lessen the​ attractiveness of​ your company's stock .​
Any business
owner who has not filed the​ 1244 corporation has in​ effect cut
himself off from 90 percent of​ his prospective investors.
Particularly when sales are down, you must be hard-nosed with
people trying to​ sell you luxuries for​ your business .​
When
business is​ booming, you undoubtedly will allow sales people to
show you new models of​ equipment or​ a​ new line of​ supplies; but
when your business is​ down, skip the​ entertaining frills and
concentrate on the​ basics .​
Great care must be taken however, to
maintain courtesy and​ allow these sellers to​ consider you a
friend and​ call back at​ another time.
Your company's books should reflect your way of​ thinking, and
whoever maintains them should generate information according to
your policies .​
Thus, you should hire an​ outside accountant or
accounting firm to​ figure your return on your investment, as​ well
as the​ turnover on your accounts receivable and​ inventory .​
Such
an audit or​ survey should focus in​ depth on any or​ every item
within the​ financial statement that merits special attention .​
in
this way, you'll probably uncover any potential financial
problems before they become readily apparent, and​ certainly
before they could get out of​ hand.
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 an​ attorney, a​ certified public 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 honored to​ serve.
Once your board is​ set up, you should meet once a​ month and
present material for​ review .​
Each meeting should be a​ discussion
of your business problems and​ an​ input from your advisors
relative to​ possible solutions .​
These members of​ your board od
advisors should offer you advice as​ well as​ alternatives, and
provide you with objectivity .​
No formal decisions need to​ be made
either at​ your board meeting, 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
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 $100 to​ $1,000 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 favorable.
By all means, join your industry's local and​ national trade
associations .​
Most of​ these organizations 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 the​ business, your
spouse will be familiar with certain people and​ situations about
your business .​
These people should include your attorney,
accountant, any consultants or​ advisors, 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 counseling is​ available .​
The Small
Business Administration published many excellent booklets,
checklist and​ brochures on quite a​ large variety of​ businesses.
these publications are available through the​ U.S.Government
printing office .​
Most local universities, and​ many private
organizations 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​ small 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​ recognize 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.




Related Articles:




Powered by Blogger.