Many CMA members are small business owners who have sought advice on how to shore up credit and manage cash flow so they can stay afloat and be poised to take advantage of an economic recovery. Would anyone in the community like to offer their own advice?
Advice to Small Business Owners During Recessionary Times
(4 posts) (4 voices)-
Posted 1 year ago #
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I deal with a number of smaller customers, many, even most, of whom are badly battered by this economy. The advice I give them is usually geared towards getting them to pay what they owe my company, but on a broader scale can be summed up as follows:
1) Pay what you can, when you can. If "extra" money comes in, apply it to old bills.
2) Always stay in contact with your creditors, and return calls promptly, even if there is no new news.
3) Consider going on COD in order to keep the balance owed from growing.
4) Use COD-Plus (payment of a fixed extra amount over each COD purchase) to pay down your old balances while you continue to buy.
5) Present your creditors with a plan, however sketchy, for getting current.So far, these steps are successfully helping me keep my customers purchasing, while reducing their balances, and provides an extra customer service element of working with them in difficult times.
Posted 1 year ago # -
Mike,
In this current economic climate, there is limited business available. Our competitors are all falling over each other in a bid for business; often even if it is strictly turning dollars. Our potential customers are seeking efficiencies in costs of operations and cash flow improvements knowing that new business is scarce. Without current business to occupy their hours, they have the time and the willingness to listen to salesmen whom they would have waved off in busier times. Use this opportunity wisely.
I would advise business owners to have their sales staff invest as much time, if not more, on gaining an in-depth understanding of their accounts needs not only now but equally important, when business does improve. Business owners are much more likely to provide details of their operations since they are desperately seeking partners who can keep them in the black. While many salesmen are clamoring for an order today, do not limit the scope of your meeting with what you can do today. You must also look further into the future and tailor proposals with a view to the prospect's longer term projects. Offer to investigate and to acquire answers for any other area of opportunity the customer is contemplating. You will be poised to be the solution not only now but in the future as well. If you are thinking ahead parallel to your account, you are you are "in the loop" from the beginning.
Standing inventory is always a problem. At the same time, competitive pressure dictates that you have material when it is needed. Additionally, both from a cash flow position and the ratios you present to the bank, you must keep inventory as slim as possible. These dueling factors run against the stereotypical habit of your salesmen who paint too rosy a picture for the quantity of their customer's purchases.
Special emphasis should be placed on sales to be more accurate in their forecasts. They must be more diligent in obtaining real numbers from their accounts. Having a nice lunch and speaking in generalities will not get the job done. When they return to the office and insist they need product; they need hard evidence beyond a hunch or the optimistic landscape painted by an account who has no reason not to tell them to have stock for him. What level of purchase commitment can your salesmen obtain from the account? Make any commitment a win-win situation.
Posted 1 year ago # -
To survive, small businesses in a recession need to be flexible, agile, responsive to customers' needs. They also need to focus on finances. Often, the small business owner is great at managing operations such as sales, purchasing, manufacturing, delivery, and customer service but are not as knowledgeable and skilled at managing the financial side of the business.
As we know, weaknesses in financial controls are magnified during an economic downturn. In addition to the recommendations posted above, I would encourage small businesses and small business owners to focus more time on their financial condition including understanding their cash inflows and outflows and taking steps to ensure that cash is available when it is needed.
Michael Dennis
Posted 7 months ago #
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