Unfortunately at this time, the economic condition for small business in most of the United States is uncertain. Sales have not been restored, over head is rising and margins are decreasing.
The following are a few concepts discussed in the book "Six Steps to Small Business Success". This “out of the box” thinking will give small businesses options to increase profits when times are tough.
Ch12-Cash: Do you have the right type of financing and business loans? Always try to position your company to have the ability to borrow cash if you need to. This may mean managing your sales, credit, collections and expenses to position your financial statements to appeal to lenders. Consider leasing equipment and facility versus buying to preserve cash for operations. Always try to have back up funds available in emergencies from family, friends or savings. Another option may be approaching investors for cash flow rather than lenders.
Ch 13-Business Plan: The necessity of a business plan: Many businesses do not have an updated realistic business plan to navigate in difficult times. Your business plan when compared to your monthly financial statements can be very valuable in making necessary mid-year corrections to your business. An excellent option is a condensed business plan. Entrepreneurs who use this system will use the plan as a foundation for their daily, weekly and monthly to do list. A condensed plan can also be a valuable asset to convince the business banker that the management team has the ability to execute positive, profitable results.
We will continue to write about these concepts in future issues. Please call us anytime with questions and feel free to pass this along to a friend.