Ten tips for small business owners during tough financial times
23 January 2015
Posted by: Author: Nwanda Incorporated
the economy is slow, small business owners struggle to survive, many for the
first time. Financial problems consume valuable time and business resources
must be dealt with proactively. Use the resources your banker provides; he has
the expertise and cares about your business and its financial well-being. Once
you have read these tips and you think you need help, call your banker and ask
1. In tough times cash is king. Have a close look at every purchase you need to make and decide if
it is worth the money. Will the product generate enough cash to pay for itself?
If not, don’t buy it.
2. Let your budget show the
a budget you will find it difficult to cope during hard financial times. Adapt
it regularly and do the same with your personal expenses. If you don’t keep
track of expenses, they will become a bottomless pit into which all your cash
3. Look at your business’s
financial position and performance objectively. Do you get maximum returns from your investments? Could you sell
those that are not making money? When times are hard, survival is the only
4. Examine how your debt is
you have an imbalance between short term and long term debt you should
restructure your long term debt so that you can pay back the short term debt
over a longer period. Be careful not to take a loan against long-term assets,
except if you are in critical need of money.
5. Prepare for your meeting
with your banker. Make
sure you have all cash flow and balance sheets and inventories at hand for your
banker. That will make your review time more productive. Write down any ideas
regarding your financial position and discuss them with your banker.
6. Ask your banker about the
Small Business Administration (SBA) guaranteed loan programs. Your banker could be able to restructure your business debt over a
longer period if the SBA is prepared to provide a credit guarantee on your loan
to the bank. If your business is situated in a qualifying rural area, you may
qualify for a guaranteed loan. Ask your banker about any additional resources
which may be of use to your business.
7. Review your insurance
your deductibles and your premium will decrease. Items that are low-risk or
obsolete should be removed from your inventory list.
8. Examine your life insurance
whole life policies have provisions that enable you to borrow against the cash
surrender value at very low rates, or you could deduct the cost of the premiums
from the cash surrender value. Determine whether your life insurance is worth
the money or whether you couldn’t get by at a lower cost. Make sure all key
personnel in your company have life insurance so that business can continue in
any of the key players’ absence.
9. Deal with financial problems
soon as a financial problem arises, deal with it immediately. Keep your banker
informed of any problems and make him part of your inner circle of confidants.
Use your team as a soundboard to discuss financial difficulties and brainstorm
10. Get some perspective. Sometimes you need to get some distance from your work to solve the
problems. Take a weekend off or go and watch a movie – whatever you do, leave
your worries behind for a short while and focus on something else – it will
make you and your business a lot stronger.
This article is a general information sheet and should not be used
or relied on as professional advice. No liability can be accepted for any
errors or ommissions nor for any loss or damage arising from reliance upon any
information herein. Always contact your financial adviser for specific and