During Difficult Times, Practice More Attentive Management

Have you talked to your suppliers recently to compare notes about the decline in the economy, and to assure them that you are a good solid customer, even if your payments are coming a little more slowly than in the past?

How about those receivables? Have you reviewed the list of customers still owing you money, and called on those who are farthest behind in payments?

These are some of the recommendations offered up by the Service Core of Retired Executives (SCORE) advisors as they give company owners some suggestions for navigating successfully in the choppy waters of the current economy.

None of the recommendations is new or dramatic. Business owners are familiar with the ideas being advanced. But these points bear repeating for those who, after several years of booming business, perhaps were lulled into a little managerial complacency. And these brief words of wisdom might provide food for thought for those entrepreneurs who have recently purchased or started a business.

Among the suggestions:

Call on your banker. As an active financial professional in your area, he or she might be able to give you insight into what's happening in the economic community in which your business functions. Look for some perspective on today's events. And while you're at it, perhaps you'll want to consider arranging a line of credit. Extra cash may not be needed right now, but lining up a source of added funds, to handle a cash "crunch" or to take advantage of a sudden opportunity, is smart business.

Solidify your relationship with creditors. If you find it necessary to renegotiate terms of your obligations sometime in the months ahead, the good communication you establish now, may pay off for your business in the future. Your suppliers may have similar problems and will appreciate your efforts to meet your debts-and that means they'll be more motivated to work with you if it's necessary to alter the amount and frequency of your payments.

And stay on top of receivables. The clients who've gotten into bad payment habits need to be reminded of their obligations. This is a time to be firm with customers who lag behind. But you also want to be flexible so that customers making the effort can succeed in their businesses, and can prove their loyalty with more business for you when good conditions return.

A careful review of expenditures is critically necessary. Do the subscriptions to publications and memberships in networking clubs yield a return to justify the expense? Remember that good budgeting often involves making a number of small changes that add up to big savings in the end. Check the accuracy of your records and procedures to make sure you aren't incurring losses that go unnoticed. And conserve cash by ordering just the supplies and inventory you need to conduct business.

Make these practices part of your regular routine, not just extraordinary measures you employ when absolutely necessary. SCORE's advice is to review your business plan and your performance on a regular basis-every few months, rather than once a year. That's the way to stay on top of your company so you can respond to little problems before they grow, and can make whatever adjustments are needed so your business runs according to plan.

This may not be the time to skimp on marketing.  It is a temptation of course to cut back on advertising or discontinue some of the customer outreach activities that cost precious funds. If there are more economical ways to maintain your presence in your market they should be considered. Don't neglect the important tasks of reassuring your current customers that you are available to serve them, and reaching out to prospects that might become customers in the future.

Posted on May 19, 2008  |   Email This Blog Post   |   Print This Blog Post