How To Prepare Your Business For A Recession In A Short Notice
In order to survive in today’s economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.
The most important, is to know the direction in which you’re heading and document your progress on a daily basis in that very direction. Be aware of what your competitors are doing and practice good money management at all times. All this will prepare you to recognize potential problems before they arise.
Amother very good business practice, but few business owners do, is to methodically build a credit rating with your local bank. Particularly, when you have a good cash flow, you should borrow $100 to $1,000 from your bank every 90 days or so.
Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month before it’s due. By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice. This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable during a recession period.
Whatever business you’re in, by now you have found that most of your customers have the money to pay at least some of what they owe you immediately. To keep your cash flow current and the number of accounts receivable in your files to a minimum, you should implement all types of communication (phone, fax, email, direct mail letter) and ask for some kind of explanation why they’re falling behind.
If you develop such a habit as part of your operating procedure, you’ll find your invoices will magically be drawn to the front of their piles of bills to pay. While maintaining a courteous attitude, don’t be hesitant, or too lenient when it comes to collecting money.
Your business documents should reflect your way of thinking, and should be maintained to generate information according to your policies. It will be wise to hire an outside accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory.
Such an audit or survey should focus in depth on any or every item within your financial statement that merits special attention. This way, you’ll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.
In conclusion, if you can manage the money first, the rest will follow! While you may think you cannot afford it, be sure that you don’t short change your self on professional services. This would apply especially during a time of emergency.
Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you’re skating on thin ice. Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you and your business – forever.
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