10 Do’s and Dont’s for Running Your Business in a Tight Economy
It’s no secret that our economy is in bad shape, and it’s quite possible that no one is feeling the strain as much as small business owners. After all, is there any group that needs access to financing more than business owners? How are entrepreneurs going to be affected, and what can you do to keep your business successful in the midst of this economic downturn?
The primary piece of advice from most experts is keep pursuing your business goals rather than sitting on your hands and waiting for the crisis to blow over. Though the conventional wisdom might be that it’s impossible to obtain financing in the midst of a crisis such as the one we are experiencing now, it is possible to continue to grow your business. Here are five ways to find financing:
1. Stay Local. Instead of pursuing financing at large, national institutions, try local or regional banks, investors, and lenders. Face-to-face contact with someone can make a difference, especially if you can convince a lender of the value that your business will add to the local economy and landscape.
2. Examine the details. Make sure your loan package is fine-tuned and well-researched. Go over it with a fine-tooth comb before presenting it to a lender. It should include complete financial statements, a business plan, referrals from past and current clients, a competitive analysis, and a SWOT analysis.
3. Cut spending. Curb your spending whenever possible, both personally and within in your business. At the same time, don’t stop investing in technology or pursuing your marketing plans. Cut where it makes sense, not where it’s going to hurt your business.
4. Finance with Equity. Although it sounds counterintuitive, equity financing can grow your business. Just be sure to use smart, quality investors rather than just anyone who comes along.
5. Use the Assets you Already Have. Many lenders are ready and willing to make asset-based loans. If you already have strong assets then this may be the way to go for you.
And here are five things to avoid.
1. Slashing prices. Unless you are absolutely certain that cutting prices on your products or services will make a difference in your sales, then don’t do it. Be aware that, in actuality, reducing prices rarely makes a difference, so do your homework first.
2. Stopping the search for money. Although it may not seem like it, there’s still money out there, so don’t stop looking for it. Sure, you may have to settle for less or lower your valuation, but it’s a big mistake just to stop looking.
3. Stopping your networking efforts. Networking is more important than ever in an economic downturn. You’d better believe that your potential customers aren’t out looking for ways to spend money, so you need to generate sales leads now more than ever.
4. Stopping the conversation. Maintaining the conversation with your customers and your vendors is key. Your vendors and customers are your best source of information about what’s going in the marketplace, what people are looking for, and what they need. Don’t wait for an economic upswing to revisit your conversations with them. Get the information they have right now and put it to use for your company.
5. Thinking about the future. While it may seem abysmal and pointless now, always keep your eye on the future. If you have a great idea, it’ll be a great idea in a bad economy or in a good economy. Do whatever you can to pursue it instead of waiting for what you perceive to be a more optimal opportunity.
Remember that forward motion is key whether the economy is booming or busting. Keep your business moving regardless of what’s happening around you!
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