- / N2N / – Tough times usually spell trouble for small businesses, including those in relatively stable industries or geographic locations. When the economy slows down consumers stop spending on anything but essentials and big corporations tighten the purse strings on expenses, put off major purchases, and park new initiatives.

A typical small business usually has limited resources. External factors can easily squeeze margins and profits until well past the breaking point. But, an economic downturn doesn’t have to spell disaster for your small business if you have good business and financial management practices. Good business and financial practices are the ultimate defense against economic storms. And, they can provide the insurance you need to capitalize on new opportunities when good times return.

Here are Ten Top Tips for Tough Times:

1) Focus on fundamentals. No small business can survive even when times are good if they don’t keep good records, develop accurate budgets, monitor cash flow, and manage credit.

2) Establish a good relationship with your banker. Having a good relationship with your banker ensures that you can go to them for advice on how to solve financial issues before they take on crisis proportions. Chances are your banker has experience in helping other small businesses weather the same types of storms you are facing and can provide advice on the best course of action. Plan in advance for potential cash flow gaps by arranging for a line of credit.

3) Treat your creditors well. Avoid falling behind on payments. Creditors are more willing to negotiate terms to small businesses if they consider them to be conscientious and reliable. Take good care of your suppliers so that if you ever need a favor, they will be inclined to grant it.

4) Treat your employees better. When business is down and cash is tight, many business owners begin to feel they are doing employees a favor by not laying them off. This attitude is dangerous because it sets in motion an undercurrent of resentment that undermines the relationship between employees and the company. Then, when the economy turns around, employees who feel underappreciated will leave you just when you need them the most.

5) Manage receivables. Be vigilant with regard to any outstanding debts to your company and pay particular attention to… Read the full story here…

Source = BestBizPractices.org

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