Survival Tips For Small Businesses

You
may be in Mail Order, Direct Mail, or you may be a local
merchant with 150 employees; whichever, however or
whatever... you\'ve got to know how to keep your business
alive during economic recessions. Anytime the cash flow in
a business, large or small, starts to tighten up, the money
management of that business has to be run as a "tight ship."
Some of the things you can and should do include
protecting yourself from expenditures made on sudden
impulse. We\'ve all bought merchandise or services we
really didn\'t need simply because we were in the mood, or
perhaps in response to the flamboyancy of the advertising
or the persuasiveness of the salesperson. Then we sort of
"wake up" a couple of days later and find that we\'ve
committed hundreds of dollars of business funds for an item
or service that\'s not essential to the success of our own
business, when really pressing items had been waiting for
those dollars. If you are incorporated, you can eliminate
these "impulse purchases" by including in your by-laws a
clause that states: "All purchasing decisions over (a certain
amount) are contingent upon approval by the board of
directors." This will force you to consider any "impulse
purchases" of considerable cost, and may even be a
reminder in the case of smaller purchases. If your business
is a partnership, you can state, when faced with a buying
decision, that all purchases are contingent upon the
approval of a third party. In reality, the third party can be
your partner, one of your department heads, or even one of
your suppliers. If your business is a sole proprietorship, you
don\'t have much to worry about really, because as an
individual you have three days to think about your
purchase, and then to nullify that purchase if you think you
don\'t really need it or can\'t afford it. While you may think
you cannot afford it, be sure that you don\'t "short-change"
yourself 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. As an example, an experienced business consultant
can fill you in on the 1244 stock advantages. Getting
eligibility for the 1244 stock category is a very simple
process, but one with tremendous benefits to your
business. The 1244 status encourages investors to put
equity capital into your business because in the event of a
loss, amounts up to the entire sum of the investment can be
written off in the current year. Without the "1244"
classification, any losses would have to be spread over
several years, and this, of course, would greatly lessen the
attractiveness of your company\'s stock. Any business
owner who has not filed the 1244 corporation has in effect
cut himself off from 90 percent of his prospective investors.
Particularly when sales are down, you must be
"hard-nosed" with people trying to sell you luxuries for your
business. When business is booming, you undoubtedly will
allow sales people to show you new models of equipment
or a new line of supplies; but when your business is down,
skip the entertaining frills and concentrate on the basics.
Great care must be taken however, to maintain courtesy
and allow these sellers to consider you a friend and call
back at another time. Your company\'s books should reflect
your way of thinking, and whoever maintains them should
generate information according to your policies. Thus, you
should hire an outside accountant or 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. In this way, you\'ll probably uncover any potential
financial problems before they become readily apparent,
and certainly before they could get out of hand. Many small
companies set up advisory boards of outside professional
people. These are sometimes known as Power Circles and
once in place, the business always benefits, especially in
times of short operating capital. Such an advisory board or
power circle should include an attorney, a certified public
accountant, civic club leaders, owners or managers of
businesses similar to yours, and retired executives. Setting
up such an advisory board of directors is really quite easy,
because most people you ask will be honored to serve.
Once your board is set up, you should meet about once a
month and