Broad economic slowdowns can often trickle down to small businesses, including those in relatively stable industries or geographic locations. Individuals tend to cut back on discretionary spending while corporations curb routine activities, delay major purchases, and shelve new initiatives.
For many small businesses with limited resources, these and other factors often combine to pressure bottom lines past the breaking point, creating a domino effect of other dilemmas such as a credit crunch or layoffs.
A downturn doesn’t have to spell disaster for your small business, however. Good financial management practices will help you weather even the worst of economic times, and be ready to capitalize on new opportunities will inevitably come with good times return.
Begin with the basics. Even when times are terrific, no small business can survive without good recordkeeping, budgeting, cash flow monitoring, and credit management.
Consult your bank. Lenders can tap their vast experience in economic cycles to advise you on issues specific to your business and industry. Depending on your projected long-term expenses, consider arranging a line of credit in case a cash flow gap occurs.
Be on good terms with your creditors. Falling behind on payments is never the answer, even if it’s “just this once.” Creditors will be more amenable to renegotiating terms to small businesses they consider to be conscientious and reliable.
Watch your receivables. By the same token, you need to stay on top of any outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate where appropriate.
Scrutinize your spending. Rather than arbitrarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business. That will make it easier to redirect money to areas that enhance business performance.
Step up your review of financials. Assessing your reports weekly or biweekly rather than monthly will put you in a better position to make informed decisions. Similarly, a monthly or quarterly review your business plan enables you to adjust your strategy and direction to changing market conditions.
Keep marketing in the mix. Look for cost-effective ways to keep your company visible to current customers and potential new markets. They may be ready to restart their spending long before the headlines proclaim an end to the economic crisis.
For more help in coping with an uncertain economy, contact SCORE “Counselors to America's Small Business.” SCORE is a nonprofit organization of more than 10,500 volunteer business counselors who provide free, confidential business counseling and training workshops to small business owners.
Call 619-557-7272 or visit www.score-sandiego.org to find out how SCORE can assist your business.
Small Business Success
In 2005, after being forced out of his original fabrication facility, by a greedy landlord, in Tecate, Mexico, losing over $80,000 worth of his equipment and supplies, Frank Tyler had to start his business, T2K Trailers Inc, from scratch. To stay afloat, he and his family built trailers in their garage, to fulfill their contracts, until they out grew the space required and moved into their current location, in El Cajon, Calif. After 3 short years, T2K Trailers is looking to move into a larger facility (approx. 10,000 square foot with outside storage), with a 5 year lease and option to buy. He now employs 8 full time and 3 part-time people. Frank says, “We hire those who need jobs, sometimes right off the street.” This year, Frank, proud of his businesses success, hopes to break $1 million in sales.
Frank has worked hard to build the business and also makes time to educate himself, in as many aspects of business ownership as he can. He has taken a variety of workshops offered by SCORE Counselors to America’s Small Business, to include topics, such as business computer skills, networking, understanding government contracts and many more. He has also taken workshops offered by the San Diego County Water Authority’s Small Contractor Outreach and Opportunities Program (SCOOP).
In 2007, T2K Trailers utilized three, SBA loans totaling $200,000. These loans improved the business’ cash flow, allowed them to hire new employees and update their welding equipment inventory with new machines. “What has been done by Frank, in rebuilding his business from scratch a second time, is extremely impressive. I anticipate he will be even more successful than before.” says Ruben Garcia, San Diego SBA District Director.
T2K Trailers is a niche business, and as a result the recession has not affected the company very much. It specializes in completely custom built trailers that other companies don’t want to be bothered with, leaving the “cookie-cutter” trailers to Carson, Texas Trailer, Big Tex and the like. T2K manufactures trailers for virtually any purpose, including but not limited to hauling boats, jet skis, and heavy equipment. In addition to trailers, they do metal fabrication, trailer retrofits and repairs and offer a spray on truck bed liner called Superliner that creates a durable rustproof surface. They are also testing a new product, have applied for a patent for it and are waiting for just the right time to introduce the new product line.
To all small business owners and entrepreneurs, Frank Tyler passes along these words from Sir Winston Churchill …”never give up … never, ever give up.” They have served him well.
To learn more about T2K Trailers, Inc. visit www.t2ktrailers.com or call 619-444-4766.
Learn more about SBA at www.sba.gov/ca/sandiego or call 619-727-4884.