Get some belt-tightening tips for surviving an economic slowdown and find out how to emerge stronger and more profitable when business picks up again.
Perhaps the most important thing to maintain right now is the morale of your employees. Call a meeting and explain your plans for surviving the economic downturn. Solicit ideas on how each employee can personally contribute to your plan. Chances are, you will have to make some tough decisions and let go of some people to cut back on payroll and maintain cash flow. If you do, do it with as much dignity as possible and explain to the remaining employees why it is necessary to make cutbacks to preserve their jobs. This is the time to pull together, and it’s crucial that you involve everyone in the process. Be a leader. Stay positive all the time. Your level of enthusiasm will be infectious—whether it’s positive or negative—and will dictate the mood on the shop floor. Always make sure it’s positive.
I’ve said this before, and I’ll say it again: Cash flow is key to the success of any business. Lack of it will put you out of business a lot faster in our current economic climate. Stay on top of your payables and receivables. Don’t let customers fall behind on their payments. Make the most of the net 30 terms that you have negotiated with your suppliers. Hold onto your money as long as you can. Save every penny that you can, however insignificant the amount may seem, and it will drop to your bottom line.
Get creative in finding ways to increase cash flow. A customer of mine recently told me that he asked his credit-card customers to pay him using courtesy checks that credit-card companies send when customers sign up for the cards. Apparently, the courtesy checks are as valid as regular checks and incur none of the processing fees that can take a bite out of your precious margins. These courtesy checks are often free for the asking. He said that his clients are usually so impressed by the idea that they immediately suggest the same thing to their own customers.
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