With debt-ridden consumers hankering down for what seems to be developing into a possibly long-lived recession, what is a small business owner to do? How can a small business owner expect to experience economic survival in a debt-ridden era? There has been significant media attention advising consumers on cost-cutting and debt reduction ideas, but where does this leave the small business owner? How concerned should the small business owner be?
A quick review may help alleviate some fears or possibly encourage some small changes necessary to help businesses survive. The key to preventing. financial difficulty starts with a realistic attitude and a serious response to early warning signs. If the warning signs are heeded in time, then there are a number of financial tips that can help struggling businesses successfully emerge from this economic turmoil.
As all small business owners know, cash is king. Calls from banks and other creditors, as well as constantly operating against credit limits are warning signs that cash-flow is a problem. Ideally a cash flow forecast should be at least two months and possibly longer if the information can be made available. Having a cash flow plan is the single most important concern for any business but it is especially crucial in these economic times. A detailed cash-flow plan will provide direction to limited cash resources. But as a small business owner it is important to remember to be objective and make your assumptions based on the most reasonable outcome.
At times this may require an independent assessment from an outside professional who has less of an emotional stake in the success of your business. Being unaware of the nature of your cash resources can lead even the most viable business into ruin.
Determining the status of business spending often allows for a better understanding of where any problems are occurring. By cutting costs a business can let employees, investors and creditors know that they are being proactive with respect to their financial concerns. This may even help to set employees at ease over concerns and rumors regarding the financial demise of the company.
See Also: Corporate Bankruptcy